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 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 $ 15,600 136,000 8,600 76,000 250,700 10,600 $497,500 $406,000 $ 66,000 $ 20,600 $ 30,600 $ 40,600 $ 70,600 The company uses a predetermined overhead rate of $25 per machine-hour to apply overhead cost to jobs. A total of 20,300 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

Overhead cost 10000 Requirement: 1 Overapplied Explanation: Actual manufacturing overhead costs Manufacturing overhead applied: (20,300 Machine hours * $25 overhead rate) Overapplied overhead cost 497500 507500 10000

20600 Requirement: 2 Chang Company Schedule of cost of Goods Manufactured Direct materials: Raw materials Inventory, beginning Add: Purchase of raw materials Total Raw materials available Less: Raw materials inventory, ending Raw materials used in production Less: Indirect materials Direct labor Manufacturing overhead cost applied to work in process Total manufacturing costs Add: Work in process inventory, beginning 406000 426600 30600 396000 15600 380400 66000 507500 953900 40600 994500 706001 Less: Work in process inventory, ending Cost of goods manufactured 923900