# Question: Gordon Hammock Company produces a variety of hammocks and other

Gordon Hammock Company produces a variety of hammocks and other outdoor products. The company uses job costing and applies overhead to work in process using a predetermined overhead rate, with direct labor hours as the cost driver. At the beginning of the year, the company estimated its overhead for the next year to be \$66,000 and estimated that it would incur 4,800 direct labor hours. The company had no beginning inventories of raw materials, WIP, or finished goods, and it experienced the following events during the year:
Purchased \$100,000 of raw materials
Direct materials used in production amounted to \$70,000
Production employees worked 4,500 labor hours
Production employeesâ€™ pay averaged \$11 per hour
\$180,000 of completed products were transferred to finished goods
Products costing \$160,000 were sold

Required
A. Calculate the ending balance of direct materials inventory.
B. Calculate the ending balance of work in process inventory.
C. Calculate the ending balance of finished goods inventory.
D. At the end of the year, the Gordon Hammock Company had incurred actual overhead costs of \$65,000. Did the company over- or under apply overhead for the year? Is the cost of goods sold too high or too low?

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