Applying Overhead; Cost of Goods Manufactured
The following cost data relate to the manufacturing activities of Black Company during the just completed year:
Manufacturing overhead costs: | |
Property taxes, factory | $3,000 |
Utilities, factory | 5,000 |
Indirect labor | 10,000 |
Depreciation, factory | 24,000 |
Insurance, factory | 6,000 |
Total actual manufacturing overhead costs | $48,000 |
Other costs incurred: | |
Purchases of raw materials | $32,000 |
Direct labor cost | $40,000 |
Inventories: |
|
Raw materials, beginning | $8,000 |
Raw materials, ending | $7,000 |
Work in process, beginning | $6,000 |
Work in process, ending | $7,500 |
The company uses a predetermined overhead rate to apply overhead cost to jobs. The rate for the year was $5 per machine-hour; a total of 10,000 machine-hours was recorded for the year. All raw materials ultimately become direct materials—none are classified as indirect materials.
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.
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