Question

$ 15,500 135,000 8,500 75,000 230, 700 10,500 $475,200 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 $405,000 $ 65,000 $ 20,500 $ 30,500 $ 40,500 $ 70,500 The company uses a predetermined overhead rate of $24 per machine-hour to apply overhead cost to jobs. A total of 20,200 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.

Answer 1

Requirement 1

Overheads Overapplied

$ 9,600

Requirement 2

CHANG COMPANY
Cost of Goods manufactured
Direct Material
Raw material Inventory Beginning	$ 20,500
Raw material Purchased	$ 389,500
Raw material available for use	$ 410,000
Less: Raw material Inventory Ending	$ 30,500
Direct Material Used		$ 379,500
Direct labor		$ 65,000
Manufacturing Overheads applied		$ 484,800
Total manufacturing Cost		$ 929,300
Add: Beginning Work in Progress		$ 40,500
Total Cost of Work in Progress		$ 969,800
Less: Ending Work in progress		$ 70,500
Cost of Goods Manufactured		$ 899,300

Alternate solution for requirement 2

CHANG COMPANY
Cost of Goods manufactured
Direct Material
Raw material Inventory Beginning	$ 20,500
Raw material Purchased	$ 405,000
Raw material available for use	$ 425,500
Less: Indirect material used	$ 15,500
Less: Raw material Inventory Ending	$ 30,500
Direct Material Used		$ 379,500
Direct labor		$ 65,000
Manufacturing Overheads applied		$ 484,800
Total manufacturing Cost		$ 929,300
Add: Beginning Work in Progress		$ 40,500
Total Cost of Work in Progress		$ 969,800
Less: Ending Work in progress		$ 70,500
Cost of Goods Manufactured		$ 899,300

Working

Overheads applied (24 x 20200)	$ 484,800
Actual overheads	$ 475,200
Overheads Overapplied	$ 9,600