Question

The following cost data relate to the manufacturing activities of Chang Company during the just completed year: aped $ 15,500 135,000 8,500 75,000 230, 700 10,500 $475,200 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 Book $405,000 $ 65,000 $ 20,500 $ 30,500 $ 40,500 $ 70,500 The company uses a predetermined overhead rate of $24 per machine-hour to apply overhead cost to jobs. A total of 2 machine-hours were used during the year. eference 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

1.

Over/under applied overhead = Applied overhead - Actual overhead

Over/under applied overhead = 20,200*$24 - $475,200

Over/under applied overhead = 484,800 - 475,200

Over applied overhead = $9,600

2.

Chang Company Schedule of Cost of Goods Manufactured
Direct materials:
Beginning raw materials	$20,500
Purchases of raw materials	405,000
Total raw materials available	425,500
Ending raw materials	(30,500)
Raw materials used in production	395,000
Direct material used	(15,500)	$379,500
Direct labor		65,000
Applied manufacturing overhead		484,800
Total manufacturing costs		929,300
Beginning work in process		40,500
		969,800
Ending work in process		(70,500)
Cost of goods manufactured		$899,300

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