Far West Manufacturing Company operates a job-order costing system and appliesoverhead cost to jobs on the basis of direct material cost. Its predetermined overhead ratewas based on a cost formula that estimated $500,000 of manufacturing overhead for anestimated allocation base of $390,625 direct material dollars. The company has providedthe following data in the form of an Excel worksheet:Ending$55,000Beginning$38,00079,00047,000Raw MaterialsWork in Process166,125138,000Finished GoodsThe following actual costs were incurred during the year:$450,000$119,000Purchase of raw materialsDirect labor costManufacturing overhead costs:Indirect materials104,875Insurance, factoryDepreciation of equipmentIndirect labor102,00035,00032,70041,000Property taxesMaintenanceRent, building23,42549,000Required:1. Compute the predetermined overhead rate for the year.2. Prepare a schedule of cost of goods manufactured for the year.3. Compute the amount of underapplied or overapplied overhead for the year.4. Prepare a schedule of cost of goods sold for the year. Adjust the underapplied oroverapplied overhead to cost of goods sold.5. Prepare all journal entries related to manufacturing overhead. Besides indirectmaterials, indirect labor and depreciation, all other costs are recorded as accountspayable.

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Description: Far West Manufacturing Company operates a job-order costing system and appliesoverhead cost to jobs on the basis of direct material cost. Its predetermined overhead ratewas based on a cost formula that estimated $500,000 of manufacturing overhead fo

Factory overhead means the cost which is incurred in factory but not directly linked with…

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Far West Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct material cost. Its predetermined overhead rate was based on a cost formula that estimated $500,000 of manufacturing overhead for an estimated allocation base of $390,625 direct material dollars. The company has provided the following data in the form of an Excel worksheet: Beginning $38,000 79,000 47,000 Ending $55,000 166,125 Raw Materials Work in Process Finished Goods 138,000 The following actual costs were incurred during the year: Purchase of raw materials Direct labor cost $450,000 $119,000 Manufacturing overhead costs: Indirect materials Insurance, factory Depreciation of equipment Indirect labor 104,875 102,000 35,000 32,700 Property taxes Maintenance 41,000 23,425 Rent, building 49,000 Required: 1. Compute the predetermined overhead rate for the year. 2. Prepare a schedule of cost of goods manufactured for the year. 3. Compute the amount of underapplied or overapplied overhead for the year.

Far West Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct material cost. Its predetermined overhead rate was based on a cost formula that estimated $500,000 of manufacturing overhead for an estimated allocation base of $390,625 direct material dollars. The company has provided the following data in the form of an Excel worksheet: Beginning $38,000 79,000 47,000 Ending $55,000 166,125 Raw Materials Work in Process Finished Goods 138,000 The following actual costs were incurred during the year: Purchase of raw materials Direct labor cost $450,000 $119,000 Manufacturing overhead costs: Indirect materials Insurance, factory Depreciation of equipment Indirect labor 104,875 102,000 35,000 32,700 Property taxes Maintenance 41,000 23,425 Rent, building 49,000 Required: 1. Compute the predetermined overhead rate for the year. 2. Prepare a schedule of cost of goods manufactured for the year. 3. Compute the amount of underapplied or overapplied overhead for the year.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter4: Accounting For Factory Overhead

Section: Chapter Questions

Problem 15P: The following information, taken from the books of Herman Brothers Manufacturing represents the...

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