Question

Coble Woodworking Corporation produces fine cabinets. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated shaper. Additional information is provided below the most recent month:
Estimates at the beginning of the month:
Estimated total fixed manufacturing overhead Capacity of the shaper ac: $33,075 270 hours results Sales $79,268 Direct materials $12,200 $17,400 Direct labor fixed manuftactur overhead 8.100 Selling and administrative exnense Actual hours of shaper use 250 hours The gross margin that would be reported the income statement prepared for internal management purposes would be closest to:_____.
a. $19.043
b. $16,593
c. $10.943
d. $79,268

Answer 1

Answer:

The correct response is "Option a ($19,043)"

Explanation:

The given values are:

Estimated overhead,

= $33,075

Sales,

= $79,268

Estimated shaper hours,

= 270 hours

Direct materials,

= $12,200

Direct labor,

= $17,400

Actual shaper hours,

= 250 hours

Now,

The fixed overhead rate will be:

= $\frac{Estimated \ overhead}{Estimated \ Shaper \ hours}$

On substituting the values, we get

= $\frac{33,075}{270}$

= $122.50 \ per \ shaper$ ($)

The applied fixed overhead will be:

= $Actual \ shaper \ hours\times Fixed \ overhead \ rate$

= $250\times 122.50$

= $30,625$ ($)

then,

The total cost of sold goods will be:

= $Direct \ materials +Direct \ labor +Applied \ overhead$

= $12,200+ 17,400+ 30,625$

= $60,225$ ($)

The gross margin will be:

= $Sales-Cost \ of \ goods \ sold$

On substituting the above given values, we get

= $79,268-60,225$

= $19,043$ ($)