Question

The following cost data relate to the manufacturing activities of Black Company during the just completed year: Manufacturing overhead costs incurred: Property taxes, factory $ 2,900 Utilities, factory 4,900 Indirect labor 9,900 Depreciation, factory 23,900 Insurance, factory 5,900 Total actual manufacturing overhead costs $ 47,500 Other costs incurred: Purchases of raw materials $ 32,200 Direct labor cost $ 39,400 Inventories: Raw materials, beginning $ 8,400 Raw materials, ending $ 6,700 Work in process, beginning $ 5,100 Work in process, ending $ 7,400 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 11,500 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.

______ overhead cost __________

2. Prepare a schedule of cost of goods manufactured for the year using the indirect method. (Enter all deductions as a negative.)

Answer 1

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Actual Overhead		$     47,500
Applied Overhead		$     57,500
$5*11,500 Hours
Overapplied Overheads	$56,500-$47,500	$     10,000
Part 2
Direct Material
Raw Material inventory, Beginning		$        8,400
Add: Purchase of Raw Material		$     32,200
Raw material available for use		$     40,600
Less: Raw Material inventory, ending		$      -6,700
Direct Material			$ 33,900
Direct Labor			$ 39,400
Manufacturing overhead cost applied			$ 57,500
Total manufacturing cost			$130,800
Add: Work in process, beginning			$    5,100
			$135,900
Less: Work in process, ending			$   -7,400
Cost of goods manufactured			$128,500