Question 4 (30 marks)

PROBLEM 526 (Garrison Text) Schedule of Cost of Goods Manufactured; Overhead Analysis

Calgary Injection Moulding operates a job-order costing system and applies overhead cost to jobs on the basis of machine-hours. In computing an overhead rate for the year, the companys estimates were as follows: manufacturing overhead cost, $248,000, and machine-hours, 40,000. The company has provided the data in the following table:

Beginning Ending

Raw Materials $21,000 $16,000

Work in Process $44,000 $40,000

Finished Goods $68,000 $60,000

The following actual costs were incurred during the year:

Purchase of raw materials (all direct) $133,000

Direct labour $ 80,000

Machine-hours 42,000

Manufacturing overhead costs $264,000

Required:

1.Compute the predetermined overhead rate for the year.

2. Compute the amount of under applied or over applied overhead for the year. How is over applied (under applied) overhead disposed of at year-end?

3.Prepare a schedule of cost of goods manufactured for the year.

4. Compute the cost of goods sold for the year. (Do not include any under applied or over applied overhead in your cost of goods sold figure.)