Question

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 16,300 143,000 9,300 83,000 149,100 11,300 $412,000 Other costs incurred: Purchases of raw materials (both direct and indirect) Direct labor cost $413,000 $ 73,000 Inventories: Raw materials, beginning Raw materials, ending Work in process, beginning Work in process, ending 21,300 31,300 $ 41,300 $ 71,300 The company uses a predetermined overhead rate of $20 per machine-hour to apply overhead cost to jobs. A total of 21,000 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 Required Prepare a schedule of cost of goods manufactured for the year 2 Chang Company Schedule of Cost of Goods Manufactured Direct materials Total raw materials available Raw materials used in production 0 Total manufacturing costs 0 Cost of goods manufactured < Required! Required 2

Answer 1

Predetermined overhead cost = $20 per machine hour

Predetermined total overhead cost = 21000 machine hour * $20

= $420,000

Actual overhead cost = $412,000

So, here there is overapplied cost of $8,000 ($420,000 - $412,000) since the actual cost is less than budgeted cost.