The following cost data relate to the manufacturing activities of Chang Company during the just completed...

The following cost data relate to the manufacturing activities of Chang Company during the just completed year:


Manufacturing overhead costs incurred:
Indirect materials	$	15,600
Indirect labor		136,000
Property taxes, factory		8,600
Utilities, factory		76,000
Depreciation, factory		250,700
Insurance, factory		10,600
Total actual manufacturing overhead costs incurred	$	497,500
Other costs incurred:
Purchases of raw materials (both direct and indirect)	$	406,000
Direct labor cost	$	66,000
Inventories:
Raw materials, beginning	$	20,600
Raw materials, ending	$	30,600
Work in process, beginning	$	40,600
Work in process, ending	$	70,600

The company uses a predetermined overhead rate of $25 per machine-hour to apply overhead cost to jobs. A total of 20,300 machine-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.

Solutions

Expert Solution

Answer 1.

Amount of underapplied or overapplied overhead cost for the year = Overapplied by $10,000

Explanation:

Total actual manufacturing overhead costs incurred	$497,500
Applied manufacturing overhead (20,300 MH * $25 MH)	$507,500
Overapplied (Since Applied manufacturing overhead is more than Actual manufacturing overhead)	$10,000

Answer 2.

Chang Company

Schedule of Cost of Goods Manufactured for the year

Direct materials
Raw materials, beginning	$20,600
Add: Purchases of raw materials	406,000
Raw materials available for use	426,600
Less: Raw materials, ending	30,600
Raw materials used in production	396,000
Less: Indirect materials	15,600	$380,400
Direct labor		66,000
Manufacturing overhead cost applied		507,500
Total manufacturing costs		953,900
Add: Work in process, beginning		40,600
		994,500
Less: Work in process, ending		70,600
Cost of Goods Manufactured		$923,900

ekkarill92 answered 1 year ago

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