Question

Media Manufacturing costs: Comment $2,000 Property taxes, factory Utilities, factory $6,000 Indirect labor $12,000 $15,000 Depreciation, factory Insurance, factory $7,000 Total actual manufacturing overhead costs $42,000 Other costs incurred: Purchases of raw materials $30,000 Direct labor cost $45,000 Inventories: $10,000 $5,000 $7,000 Raw materials, beginning Raw materials, ending Work in process, beginning Work in process, ending Finished goods, beginning Finished goods, ending $6,500 $15,000 $5,000 The company uses a predetermined overhead rate to apply overhead cost to production. The rate for the year was $7 per machine hour; a total of 5,000 units machine hours was recorded for the year. a. Calculate the amount of over or underapplied overhead cost for the year. b. Calculate the cost of goods sold for the year. Do not include any over or underapplied overhead in your cost of goods sold figure.

Answer 1

1. Actual Overhead= 42000, Budgeted overhead= 7*5000= 35000. Therefore, over applied overhead= 42000-35000= $7000

Amount 10000 - 30000 - -5000 35000 45000 . A COST OF GOODS SOLD Direct material Opening (+) Purchases (-) Closing - Direct material used - Direct Labour - Factory Overhead Property taxes Indirect Labour 1 Factory utilities 2 Depreciation 3 Insurance 4 Total Factory overhead 5 5 Total Manufacturing Cost 7 Add: Opening WIP 3 Less: Closing WIP Add: Beginning Finished goods Less: Clising finished goods 1 Cost of goods sold 2000 12000 6000 15000 7000 42000 122000 7000 -6500 15000 -5000 132500 2 3