PROBLEM 3–24 Schedule of Cost of Goods Manufactured; Overhead Analysis [LO1, LO2, LO3, LO6, LO7]
The Pacific Manufacturing Company operates a job-order costing system and applies overhead
cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based on a cost formula that estimated $126,000 of manufacturing overhead for an estimated allocation base of
$84,000 direct labor dollars. The company has provided the following data in the form of an Excel worksheet:
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. Assume all raw materials are used in production as direct materials.
3. Compute the unadjusted 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 dis- posing of underapplied or overapplied overhead?
4. Job 137 was started and completed during the year. What price would have been charged to the customer if the job required $3,200 in materials and $4,200 in direct labor cost, and the company priced its jobs at 40% above the job’s cost according to the accounting system?
5. Direct labor made up $8,000 of the $40,000 ending Work in Process inventory balance. Sup- ply the information missing below: