Bakerston Company Is a Manufacturing Firm That Uses Job-Order Costing

Essay

Bakerston Company is a manufacturing firm that uses job-order costing.The company's inventory balances at the beginning and end of the year were as follows:
$\begin{array}{|l|r|r|}\hline \text { Balance } & \text { Begiming Balance } & \text { Ending Balance } \\\hline \text { Raw materials } & \$ 14,000 & \$ 22,000 \\\hline \text { Work in process } & 27,000 & 9,000 \\\hline \text { Finished goods } & 62,000 & 77,000 \\\hline\end{array}$
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:
a.)Raw materials purchased: $315,000.
b.)Raw materials requisitioned for use in production: $307,000 ($281,000 direct and $26,000 indirect).
c.)The following employee costs were incurred:
Direct labour: $377,000
Indirect labour: $96,000
Administrative salaries: $172,000
d.)Selling costs: $147,000.
e.)Factory utility costs: $10,000.
f.)Depreciation for the year: $127,000,of which $120,000 is related to factory operations and $7,000 is related to selling and administrative activities.
g.)Manufacturing overhead was applied to jobs.The actual level of activity for the year was 34,000 machine hours.
h.)Sales for the year: $1,253,000.
Required:
a.Prepare a schedule of cost of goods manufactured in good form.
b.Was the manufacturing overhead under- or overapplied? By how much?
c.Prepare an income statement for the year in good form.The company closes out any under- or overapplied overhead to Cost of Goods Sold.