Question

The following cost data relate to the manufacturing activities of Black Company during the just completed year: $ 3,000 4,900 9,800 23,900 5.900 $47,500 Manufacturing overhead costs incurred: Property taxes, factory Utilities, factory Indirect labor Depreciation, factory Insurance, factory Total actual manufacturing overhead costs Other costs incurred: Purchases of raw materials Direct labor cost Inventories: Raw materials, beginning Raw materials, ending Work in process, beginning $31,900 $40,600 $ 8,700 $ 6,300 $ 5,000 $ 7,500 Work in process, ending The company uses a predetermined overhead rate to apply overhead cost to jobs. The rate for the year was $5 per machine-hour; a total of 11,400 machine-hours was recorded for the year. All raw materials ultimately become direct materials-none are classified as indirect materials. Required: 1. Compute the amount of underapplied or overapplied overhead cost for the year. overhead cost

Answer 1

1.

Predetermined overhead rate = $5 per machine hour

Actual machine hours = 11,400

Applied manufacturing overhead cost = Actual machine hours x Predetermined overhead rate

= 11,400 x 5

= $57,000

Actual manufacturing overhead applied = $47,500

Over applied manufacturing overhead = Applied manufacturing overhead cost - Actual manufacturing overhead applied

= 57,000-47,500

= $9,500

Over applied

Overhead cost

$9,500

2.

Black Company
Schedule of Cost of Goods Manufactured
Direct materials:
Raw materials , beginning	8,700
Purchase of raw materials	31,900
Raw materials available for use	40,600
Raw materials , Ending	-6,300
raw materials used in production		34,300
Direct labor		40,600
Applied manufacturing cost		57,000
Total manufacturing cost		131,900
Work in process, beginning		5,000
Work in process, ending		-7,500
Cost of goods manufactured		$129,400

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