Question

please do the "required"

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 $ 15,000 130,000 8,000 70,000 240,000 10,000 $ 473,890 $ 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

Answer 1

1. Overapplied Overhead cost    [Refer working note]

$12,000

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2
Chang Company
Schedule of Cost of Goods Manufactured
Direct Materials:
Raw materials inventory, beginning	$20,000
Add: Purchases of raw materials	$400,000
Total raw materials available	$420,000
Less: Raw materials inventory, ending	$30,000
Raw Materials used in production	$390,000
Less: Indirect materials	$15,000	$375,000
Direct labor		$60,000
Manufacturing overhead cost applied to work in process          [Refer working note]		$485,000
Total manufacturing costs        [$375,000 + $60,000 + $485,000]		$920,000
Add: Work in Process inventory, beginning		$40,000
		$960,000
Less: Work in process inventory, ending		$70,000
Cost of Goods Manufactured		$890,000

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Working note - Computation of Under-applied or Over-applied overhead
Predetermined Overhead rate                                             (a)	$25
Number of machine hours                                                    (b)	19,400
Manufacturing overhead cost applied to work in process   (c = a x b)	$485,000
Actual manufacturing overhead cost incurred                     (d)	$473,000
Since amount of manufacturing overhead applied ($485,000) is more than the manufacturing overhead cost incurred ($473,000), overhead is considered to be over-applied.
Over-applied overhead cost                                         [c - d]	$12,000