Question

The following cost data relate to the manufacturing activities of Chang Company during the just completed year: $ 16,200 142,000 9,200 82,000 169,900 11,200 $430,500 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 $412,000 $ 72,000 $ 21,200 $ 31,200 $ 41,200 $ 71,200 The company uses a predetermined overhead rate of $21 per machine-hour to apply overhead cost to jobs. A total of 20,900 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

Solution

.

Overheads Overapplied

$ 8,400

.

CHANG COMPANY
Cost of Goods manufactured
Direct Material
Raw material Inventory Beginning	$ 21,200
Raw material Purchased	$ 412,000
Raw material available for use	$ 433,200
Less: Indirect material used	$ 16,200
Less: Raw material Inventory Ending	$ 31,200
Direct Material Used		$ 385,800
Direct labor		$ 72,000
Manufacturing Overheads applied		$ 438,900
Total manufacturing Cost		$ 896,700
Add: Beginning Work in Progress		$ 41,200
Total Cost of Work in Progress		$ 937,900
Less: Ending Work in progress		$ 71,200
Cost of Goods Manufactured		$ 866,700

Working

Overheads applied (20900 x $21)	$ 438,900
Actual overheads	$ 430,500
Overheads Overapplied	$ 8,400