Question - Almeda Products, Inc. uses a job order costing system. Inventory balances on April 1 were raw materials, $32,000; work in process, $20,000; and finished goods, $48.000
Additional information are as follows:
a. Raw materials purchased $170,000.
b. Raw materials issued from storeroom to production $180,000; 80% direct and 20% indirect.
c. Direct labor $200,000; indirect labor $82,000; and selling and administrative salaries $90,000.
d. Utility costs incurred in the factory, $65,000. Advertising costs $100,000
e. Insurance Expense $20,000; 90% factory related and 10% selling and administrative related.
f. Depreciation Expense $180,000; 85% for factory assets and 15% for selling and administrative assets
g. Predetermined overhead rate is 175% of direct labor cost. Cost of goods manufactured was $700,000
h. Sales for the year, $1,000,000; cost of the goods sold, $720,000.
Required:
1. Compute for the under- or over-applied overhead for the year. Is it under-applied or over-applied?
2. Compute for the ending balance of raw materials, work in process and finished goods.
3. The company under- or over-applied overhead to cost of goods sold. Prepare an income statement.