Question

Uus m uidctueu (LUS, LUD, LUY) The following cost data relate to the manufacturing activities of Black Company during the just completed year: Manufacturing overhead costs: Property taxes, factory Utilities, factory Indirect labour Depreciation, factory Insurance, factory 4,100 6,650 12,200 26,750 8,200 Total actual manufacturing overhead costs 57,900 37,500 47,700 Other costs incurred: Purchases of raw materials. Direct labour cost Inventories: Raw materials, beginning Raw materials, ending Work in process, beginning Work in process, ending 10,209 8,100 7,650 9,700 The company uses a predetermined overhead rate to apply overhead cost to production. The rate for the year was $6 per machine- hour, a total of 10,000 machine-hours were 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.

Answer 1

1.Over applied overhead is:

Particulars	Amount ($)	Amount ($)
Applied Manufacturing Overhead		60,000
Actual manufacturing overhead
Property taxes, factory	4,100
Utilities, Factory	6,650
Indirect labour	12,200
Depreciation, factory	26,750
Insurance, factory	8,200
		57,900
Overapplied overhead		2,100

2. Cost of Goods manufactured is as prepared below:

Black Company
Schedule of Cost of goods manufactured
Particulars	Amount ($)	Amount ($)
Direct Material
Opening Material	10,200
Add: Direct Material purchase	37,500
Cost of material available for use	47,700
Less: Closing Direct Material	8,100
Cost of Direct Material Used		39,600
Direct Labour Cost		47,700
Applied manufacturing overhead (10,000*6)		60,000
Total manufacturing Costs		147,300
Add: Beginning Work in Process	7,650
Less: Closing Work in Process	9,700
Cost of goods manufactured		145,250