Question

The following cost data relate to the manufacturing activities of Chang Company during the just completed year: $ 16,100 141,000 9,100 81,000 149,700 11,100 $408,000 Manufacturing overhead costs incurred: Indirect materials Indirect labor Property taxes, factory Utilities, factory Depreciation, factory Insurance, factory Total actual manufacturing overhead costs incurred Other costs incurred: Purchases of raw materials (both direct and indirect) Direct labor cost Inventories: Raw materials, beginning Raw materials, ending Work in process, beginning Work in process, ending $411,000 $ 71,000 $ 21,100 $ 31,100 $ 41,100 $ 71,100 The company uses a predetermined overhead rate of $20 per machine-hour to apply overhead cost to jobs. A total of 20,800 machine-hours were used during the year. Required: 1. Compute the amount of underapplied or overapplied overhead cost for the year. 2. Prepare a schedule of cost of goods manufactured for the year. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the amount of underapplied or overapplied overhead cost for the year. ********* overhead cost < Required 1 Required 2 >

Answer 1

Solution 1:

Overhead applied = 20800*$20 = $416,000

Actual manufacturing overhead cost = $408,000

Overapplied overhead = $416,00 - $408,000 = $8,000

Solution 2:

Chang Company
Schedule of cost of goods manufactured
Direct Material:
Raw Material, Beginning	$21,100
Add: Purchase of Raw Material	$411,000
Total Raw material available	$432,100
Less: Raw Material, Ending	$31,100
Raw material used in production	$401,000
Less: Indirect Material	$16,100	$384,900
Direct Labor cost		$71,000
Applied Manufacturing Overhead		$416,000
Total Manufacturing Costs		$871,900
Add: Work in Process, Beginning		$41,100
Subtotal		$913,000
Less: Work in Process, Ending		$71,100
Cost of goods manufactured		$841,900