| following cost data relate to the manufacturing activities of Chang Company during the just completed year: |
| Manufacturing overhead costs incurred: | ||
| Indirect materials | $ | 16,700 |
| Indirect labor | 147,000 | |
| Property taxes, factory | 9,700 | |
| Utilities, factory | 87,000 | |
| Depreciation, factory | 273,900 | |
| Insurance, factory | 11,700 | |
| Total actual manufacturing overhead costs incurred | $ | 546,000 |
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| Other costs incurred: | ||
| Purchases of raw materials (both direct and indirect) | $ | 417,000 |
| Direct labor cost | $ | 77,000 |
| Inventories: | ||
| Raw materials, beginning | $ | 21,700 |
| Raw materials, ending | $ | 31,700 |
| Work in process, beginning | $ | 41,700 |
| Work in process, ending | $ | 71,700 |
| The company uses a predetermined overhead rate to apply overhead cost to jobs. The rate for the year was $26 per machine-hour. A total of 21,400 machine-hours was recorded for the year. |
| Required: |
| 1. | Compute the amount of underapplied or overapplied overhead cost for the year. |
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| 2. | Prepare a schedule of cost of goods manufactured for the year. |
Answer
1
| Over applied overhead cost | 10400 |
Working notes for the above answer is as under
| Particular | Amount in $ |
| Actual Manufacturing overhead costs | 546000 |
| Manufacturing overhead applied: 21400 MH × $26 per MH |
556400 |
| Over applied overhead cost | 10400 |
2
| Chang Company | ||
| Schedule for Cost of goods Manufactured | ||
| Direct material | ||
| Raw materials inventory, beginning | 21700 | |
| Add: Purchase of raw materials | 417000 | |
| Raw materials available for use | 438700 | |
| Less: Raw materials inventory, ending | -31700 | |
| Raw materials used in production | 407000 | |
| Less: Indirect material | -16700 | |
| Direct labor | 390300 | |
| Manufacturing overhead cost applied to work in process |
77000 | |
| Total manufacturing cost | 467300 | |
| Add: Work in process, beginning | 41700 | |
| Less: Work in process, ending | -71700 | |
| Cost of goods manufactured | 437300 | |
