Question

Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicat The following cost data relate to the manufacturing activities of Chang Company during the just completed year: $ 16,100 141,000 9,100 81,000 149,700 11,100 $408,000 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 $411,000 $ 71,000 $ 21,100 $ 31,100 $ 41,100 $ 71,100 The company uses a predetermined overhead rate of $20 per machine-hour to apply overhead cost to jobs. A total of 20,800 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. < Prey 3 of 3 !!! Next > awaannyx *

Answer 1

1. Overapplied Overhead cost    [Refer working note]

$8,000

.

.

2
Chang Company
Schedule of Cost of Goods Manufactured
Direct Materials:
Beginning raw materials inventory	$21,100
Add: Purchases of raw materials	$411,000
Total raw materials available	$432,100
Less: Ending raw materials inventory	$31,100
Raw Materials used in production	$401,000
Less: Indirect materials	$16,100	$384,900
Direct labor		$71,000
Manufacturing overhead applied to work in process          [Refer working note]		$416,000
Total manufacturing costs                                   [$384,900 + $71,000 + $416,000]		$871,900
Add: Beginning work in Process inventory		$41,100
		$913,000
Less: Ending work in process inventory		$71,100
Cost of Goods Manufactured		$841,900

.

.

Working note - Computation of Under-applied or Over-applied overhead
Predetermined Overhead rate                                             (a)	$20
Number of machine hours                                                    (b)	20,800
Manufacturing overhead cost applied to work in process   (c = a x b)	$416,000
Actual manufacturing overhead cost incurred                     (d)	$408,000
Since the amount of manufacturing overhead applied ($416,000) is more than the manufacturing overhead cost incurred ($408,000), overhead is considered to be over-applied.
Over-applied overhead cost                                         [c - d]	$8,000