Question

The following cost data relate to the manufacturing activities of Chang Company during the just completed year: $ 15,000 130,000 8,000 70,000 240,000 10,000 $ 473,000 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 $ 400,000 $ 60,000 $ $ $ $ 20,000 30,000 40,000 70,000 The company uses a predetermined overhead rate of $25 per machine-hour to apply overhead cost to jobs. A total of 19,400 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. Underapplied overhead cost Required 1 Required 2 >

Answer 1

1.

Predetermined overhead rate = $25 per machine hour

Actual machine hours = 19,400

Overhead applied = Actual machine hours x Predetermined overhead rate

= 19,400 x 25

= $485,000

Actual overhead = $473,000

Over applied overhead = Overhead applied - Actual overhead

= 485,000-473,000

= $12,000

Over applied

Overhead

$12,000

2.

Chang Company
Schedule of Cost of Goods Manufactured
Direct materials:
Raw materials beginning	20,000
Purchase of raw materials	400,000
Total raw materials available	420,000
Raw materials ending	-30,000
Raw materials used in production	390,000
Indirect materials	-15,000	375,000
Direct labor		60,000
Manufacturing overhead applied		485,000
Total manufacturing costs		920,000
Work in process, beginning		40,000
		960,000
Work in process, beginning		-70,000
Cost of goods manufactured		$890,000

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