Babb Company is a manufacturing firm that uses joborder cost

Babb Company is a manufacturing firm that uses job-order costing. The company\'s inventory balances were as follows at the beginning and end of the year:

The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 17,900 machine-hours and incur $268,500 in manufacturing overhead cost. The following transactions were recorded for the year:

Raw materials were requisitioned for use in production, $409,100 ($380,000 direct and $29,100 indirect).

The following employee costs were incurred: direct labor, $332,000; indirect labor, $71,000; and administrative salaries, $153,000.

Depreciation for the year was $129,000 of which $111,000 is related to factory operations and $18,000 is related to selling, general, and administrative activities.

Manufacturing overhead was applied to jobs. The actual level of activity for the year was 14,900 machine-hours.

Prepare a schedule of cost of goods manufactured in good form. (Do not round predetermined overhead rate. Input all amounts as positive values. Omit the \"$\" sign in your response.)

Was the overhead underapplied or overapplied? By how much? (Do not round predetermined overhead rate. Input the amount as a positive value. Omit the \"$\" sign in your response.)

Prepare an income statement for the year in good form. Prepare off-line Cost of Goods Sold Statement and close any underapplied or overapplied overhead to Cost of Goods Sold and use the Adjusted Cost of Goods Sold to answer this requirement. (Input all amounts as positive values. Omit the \"$\" sign in your response.)

Solution

Workings:

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