Required 1 Calculate the predetermined overhead rate Predete

Required: 1. Calculate the predetermined overhead rate. Predetermined Overhead Rate 180% of Direct Labor Cost :

Solution

Answer 1 Predetermined overhead rate = Estimated manufacturing overhead cost / estimated direct labour cost Predetermined overhead rate = $105300/$58500 = 1.80 i.e.180% of direct labour cost Answer 2 T - accounts Raw Material Inventory Work in process Inventory Finished Goods Inventory Cost of goods sold Beginning balance $13,100 Beginning balance $29,600 Beginning balance $40,100 Unadjusted Cost of goods sold $187,060 Purchases $94,800 Direct Materials $69,800 Cost of goods completed $195,660 $20,060 Manufacturing Overheads $69,800 Work in process Inventory Direct Labour $41,200 $187,060 Cost of goods sold Adjusted cost of goods sold $167,000 $8,900 Manufacturing Overhead Applied Overhead $74,160 $195,660 Finished Goods Inventory Ending balance $29,200 Ending balance $19,100 Ending balance $48,700 Ending balance $0 Sales Revenue Manufacturing Overhead Selling ,General and administrative Exp. $312,000 Indirect Material $8,900 $74,160 Applied Overhead Indirect Labour $14,200 Factory Depreciation $12,000 Factory Rent $7,000 Factory Utilities $2,700 Other Factory Costs $9,300 Actual Overhead $54,100 Answer 3 Manufacturing Overhead overapplied by $20,060. Answer 4 DOBSON MANUFACTURING COMPANY Cost of goods Manufactured and Sold report Beginning raw material inventory $13,100 Add : Purchases $94,800 Less : Ending raw material inventory $29,200 Less : Indirect Material $8,900 Direct Material used in production $69,800 Direct Labour $41,200 Manufacturing overhead applied $74,160 Total Current Manufacturing Costs $185,160 Add : Beginning work in process $29,600 Total work in process $214,760 Less : Ending work in process $19,100 Cost of goods manufactured $195,660 Add : Beginning Finished Goods Inventory $40,100 Cost of goods available for sale $235,760 Less : Ending Finished Goods Inventory $48,700 Unadjusted cost of goods sold $187,060 Less : Overapplied overheads $20,060 Adjusted cost of goods sold $167,000 Answer 5 DOBSON MANUFACTURING COMPANY Income statement Sales $312,000 Less : Adjusted cost of goods sold $167,000 Gross Margin $145,000 Less : Selling,General and admin.expense $59,300 Net Income from Operations $85,700