Question

Manufacturing overhead costs incurred:

Indirect materials $15,000

Indirect labor 130,000

Property taxes, factory 8,000

Utilities, factory 70,000

Depreciation, factory 240,000

Insurance, factory                                                                   10,000

Total actual manufacturing overhead costs incurred $473,000

Other costs incurred:

Purchases of raw materials (both direct and indirect)           $400,000

Direct labor cost                                                                     $60,000

Inventories:

Raw materials, beginning                                                       $20,000

Raw materials, ending $30,000

Work in process, beginning                                                    $20,000

Work in process, ending                                                         $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.

1.	Actual manufacturing overhead costs (a)....
	Manufacturing overhead cost applied: 19,400 MH × $25 per MH (b)..................
	Overapplied overhead cost (a) ‒ (b)...........

2.	Direct materials:
	Beginning raw materials inventory...........
	Add: purchases of raw materials..............
	Total raw materials available...................
	Deduct: Ending raw materials inventory...
	Raw materials used in production............
	Less indirect materials.............................
	Direct labor................................................
	Manufacturing overhead applied to work in process....................................................
	Total manufacturing costs..........................
	Add: Beginning work in process inventory..
	Deduct: Ending work in process inventory..
	Cost of goods manufactured.......................

Answer 1

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Calculation of manufacturing overhead applied to production
Machine hours	19,400.00
Rate	25.00
Manufacturing overhead applied	485,000.00
Cost of goods manufactured	Amount $
Beginning Raw material inventory	20,000.00
Raw material Purchases	400,000.00
Total Raw material available for use	420,000.00
Less: Ending Raw material inventory	30,000.00
Raw materials used in production	390,000.00
Less: Indirect materials	15,000.00
Direct materials used	375,000.00
Direct Labor	60,000.00
Manufacturing Overhead applied	485,000.00
Total Manufacturing costs	920,000.00
Beginning Work in process inventory	20,000.00
Total cost of work in process	940,000.00
Less: Ending Work in process inventory	70,000.00
Cost of goods manufactured	870,000.00
Important Note:
Manufacturing overhead applied	485,000.00
Total actual manufacturing overhead costs incurred	473,000.00
Over applied	12,000.00
This over applied manufacturing overhead should be closed through cost of goods sold.