Question & Answer: Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis of direct mater…..

Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis of direct materials used in production (not on the basis of raw materials purchased). Its predetermined overhead rate was based on a cost formula that estimated $111,800 of manufacturing overhead for arn estimated allocation base of $86,000 direct material dollars to be used in production. The company has provided the following data for the just completed year 9 Purchase of raw materials Direct labor cost Manufacturing overhead costs: $130,000 82,000 Indirect labor Property taxes Depreciation of equipment $ 90,500 $ 8,200 20,000 $ 15,000 S 11,500 S 38,000 Maintenance Insurance Rent, building Raw Materials Work in Process Finished Goods Beginning Ending S 26,000 $18,000 S 45,000 $37,000 S 70,000 $56,000