Question

Exercise 3-7 Applying Overhead; Cost of Goods Manufactured (LO3-3, LO3-4) The following cost data relate to the manufacturing activities of Chang Company during the just completed year. 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 $ 16,200 142,000 9,200 82,000 169,900 11,200 $430,500 $412,000 $ 72,000 $ 21,200 $ 31,200 $ 41,200 $ 71,200 The company uses a predetermined overhead rate of $21 per machine-hour to apply overhead cost to jobs. A total of 20,90 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!

Answer 1

1) Overhead applied = 20900*21 = 438900

Actual overhead = 430500

Over applied overhead = 438900-430500 = 8400

2) Schedule of cost of goods manufactured

Direct material
Beginning raw material	21200
Raw material purchase	412000
Raw material available for use	433200
Less Ending raw material	-31200
raw material used	402000
Less: Indirect material	-16200	385800
Direct labor		72000
Manufacturing overhead applied		438900
Total manufacturing cost		896700
Beginning work in process		41200
Total cost of work in process		937900
Less; Ending work in process		-71200
Cost of goods manufactured		866700