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:

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Question: Bakerston Company is a manufacturing firm that uses job-order costing. The company’s inventory ba…
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Beginning
Balance
Ending
Balance
  Raw materials $ 11,200 $ 15,000
  Work in process $ 32,200 $ 14,000
  Finished goods $ 103,000 $ 122,000

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 17,300 machine-hours and
incur $259,500 in manufacturing overhead cost. The following
transactions were recorded for the year:

Raw materials were purchased,
$413,000.

Raw materials were requisitioned for use in production, $409,200
($378,000 direct and $31,200 indirect).

The following employee costs were incurred: direct labor,
$333,000; indirect labor, $73,000; and administrative salaries,
$159,000.

Selling costs, $111,000.
Factory utility costs,
$24,000.

Depreciation for the year was $126,000 of which $111,000 is
related to factory operations and $15,000 is related to selling,
general, and administrative activities.

Manufacturing overhead was applied to jobs. The actual level of
activity for the year was 14,400 machine-hours.

Sales for the year totaled $1,283,000.

Required:
a.

Prepare a schedule of cost of goods manufactured in good form.
(Do not round predetermined overhead rate. Input all
amounts as positive values.)

b.

Was the overhead underapplied or overapplied? By how much?
(Do not round predetermined overhead rate. Input the amount
as a positive value.)

c.

Prepare an income statement for the year. The company closes any
underapplied or overapplied overhead to Cost of Goods Sold.
(Input all amounts as positive values.)

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