Question

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

Manufacturing overhead costs incurred:
Indirect materials	$	15,100
Indirect labor		131,000
Property taxes, factory		8,100
Utilities, factory		71,000
Depreciation, factory		269,100
Insurance, factory		10,100
Total actual manufacturing overhead costs incurred	$	504,400
Other costs incurred:
Purchases of raw materials (both direct and indirect)	$	401,000
Direct labor cost	$	61,000
Inventories:
Raw materials, beginning	$	20,100
Raw materials, ending	$	30,100
Work in process, beginning	$	40,100
Work in process, ending	$	70,100

The company uses a predetermined overhead rate of $26 per machine-hour to apply overhead cost to jobs. A total of 19,800 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.

Answer 1

Answer- 1)- The amount of over-applied overhead costs for the year = $10400.

Explanation= Over-applied overhead costs = Actual manufacturing overhead costs – Manufacturing overhead applied

= $504400 – ($26 per machine hour*19800 hours)

= $504400 - $514800

= $10400

2)-

CHANG COMPANY
COST OF GOODS MANUFACTURED
FOR THE YEAR
Particulars	Amount	Amount
	$	$
Beginning raw materials	20100
Purchases of raw materials	401000
Less- Ending raw material	30100
Material used		391000
Direct Labor		61000
Factory Overhead
Indirect labor	131000
Utilities, factory	71000
Property tax, factory	8100
Depreciation, factory	269100
Insurance factory	10100
Indirect materials	15100
Total factory overhead		504400
Total manufacturing costs		956400
Add- Beginning work in process		40100
Total cost of goods in process		996500
Less: Ending goods in process inventory		70100
Cost of goods manufactured		926400