Question

The following cost data relate to the manufacturing activities of Chang Company during the just completed year $ 15,800 108.000 8.500 78.000 250.700 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 $ y a cast The company uses a predetermined overhead rate of $25 per machine hour b 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 1:

Applied overhead = predetermined overhead rate * actual machine hours

= $25 * 20300 = $507,500

Actaul overhead incurred = $497,500

Applied overhead is more than actual overhead, therefore overhead is overapplied.

Over applied overhead = $507500 - $497500 = $10,000

Solution 2:

חד 12 13 14 Chang Company Schedule of cost of goods manufactured Direct Material: Raw Material, Beginning $20,600 Add: Purchase of Raw Material $406,000 Total Raw material available $426,600 Less: Raw Material, Ending $30,600 Raw material used in production $396,000 Less: Indirect Material $15,600 Direct Labor cost Applied Manufacturing Overhead Total Manufacturing Costs Add: Work in Process, Beginning Subtotal Less: Work in Process, Ending Cost of goods manufactured 15 $380,400 $66,000 $507,500 $953,900 $40,600 $994,500 $70,600 $923,900 20 21 22 23 25 26 27 28 29 30 31 32 33 34 35 36 37 38 7) Sheet100 Sheet224 Sheet4 (2) Sheet 49 (2) She