Bakerston 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: Raw Materials: 

• Beginning Balance 14,000 
• Ending Balance 22,000; 
• Work in process Beginning Balance: 27,000 
• Ending Balance 9,000; 
• Finished Goods Beginning 62,000 
• Ending Balance 77,000

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 33,000 machine hours and incur $231,000 in manufacturing overhead cost. The following transactions were recorded for the year: 

• Raw materials were purchased, $315,000. 

• Raw materials were requisitioned for use in production, $307,000 ($281,000 direct and $26,000 indirect). 

• The following employee costs were incurred: direct labor, $377,000; indirect labor, $96,000; and administrative salaries, $172,000. 

• Selling costs, $147,000.

• Factory utility costs, $10,000. 

• Depreciation for the year was $127,000 of which $120,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities. 

• Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,000 machine-hours. 

• Sales for the year totaled $1,253,000. 

Required: 

a). Prepare a schedule of cost of goods manufactured. 

b). Was the overhead under applied or over applied? By how much? 

c). Prepare an income statement for the year. The company closes any under applied or over applied overhead to Cost of Goods Sold

Answer rating: 100% (QA)

A RAW MATERIAL BEG 14000 RAW MATERIAL PURCHASE 315000 RAW MATERIAL AVAILABLE 329000 RAW MATERI... View the full answer