Answer:
A. $938,339
B. $2,061 Underapplied
C. $4,900
Step-by-step explanation:
a. Preparation of a schedule of cost of goods manufactured.
Baab Corporation
Schedule of Cost of Goods Manufactured
DIRECT MATERIAL
Opening 14,350
Add Purchased 315,350
Total Raw Material Available 329,700
Less: Closing Raw Material (22,350)
Less: Indirect Raw Material used in Production (26,700)
Raw Material used in production (A) 280,650
DIRECT LABOR (B) 377,350
FACTORY OVERHEAD APPLIED
($7.7*34070) (C ) 262,339
TOTAL MANUFACTURING COSTS (A+B+C) 920,339 (280,650+377,350+262,339)
Add Opening Work in Progress 27,350
Less: Closing Work in Progress (9,350)
Cost of goods manufactured 938,339
Calculation for Factory Overhead Recovery Rate using this formula
Factory Overhead Recovery Rate = Budgeted Factory Overhead/Machine Hours
Let plug in the formula
Factory Overhead Recovery Rate=256,795/33,350
Factory Overhead Recovery Rate= $ 7.70
2. Calculation for the overhead underapplied or overapplied
First step is to compute for Total Manufacturing Overhead
Computation of Manufacturing Overhead Incurred
Indirect Material 26,700
Indirect Labour 96,350
Factory Utilities Cost 10,350
Depreciation 131,000
Total Manufacturing Overhead 264,400
Second step is to Compute for Manufacturing Overhead Under or Over applied using this formula
Let plug in the formula
Manufacturing Overhead Under or Over applied = Actual Manufacturing Overhead Incurred - Manufacturing Overhead applied
Manufacturing Overhead Under or Over applied= 264,400 - 262,339
Manufacturing Overhead Under or Over applied= $2,061 Underapplied
3. Preparation of an income statement for the year.
Baab Corporation Income Statement
Sales 1,267,000
Add: Closing Finised Goods 77,350
Less: Opening Finished Goods (62,350)
Less: Selling & Administrative Expense:
Administrative Salaries 172,350
Depreciation relating to the selling, general & administrative activities 17,000
Selling Costs 147,350
Total Selling & Administrative Expense(336,700)
Less: Underapplied Overheads (2,061)
Less: Cost of Goods Manufactured (938,339 )
Profit/Loss $4,900