Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis of direct materials used in production (not on the basis of raw materials purchased). All materials are classified as direct materials. In computing a predetermined overhead rate at the beginning of the year, the company's estimates were: manufacturing overhead cost, $800,000; and direct materials to be used in production, $500,000. The company has provided the following data in the form of an Excel worksheet:
Required:
1. a. Compute the predetermined overhead rate for the year.
b. Compute the amount of underapplied or overapplied overhead for the year.
2. Prepare a schedule of cost of goods manufactured for the year.
3. Compute the Cost of Goods Sold for the year. (Do not include any underapplied or overapplied overhead in your Cost of Goods Sold figure.) What options are available for disposing of underapplied or overapplied overhead?
4. Job 215 was started and completed during the year. What price would have been charged to the customer if the job required $8,500 in direct materials and $2,700 in direct labor cost and the company priced its jobs at 25% above the job's cost according to the accounting system?
5. Direct materials made up $24,000 of the $70,000 ending Work in Process inventory balance. Supply the information missing below:
