Question

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

    

Manufacturing overhead costs incurred:
Indirect materials	$	15,500
Indirect labor		135,000
Property taxes, factory		8,500
Utilities, factory		75,000
Depreciation, factory		230,700
Insurance, factory		10,500
Total actual manufacturing overhead costs incurred	$	475,200
Other costs incurred:
Purchases of raw materials (both direct and indirect)	$	405,000
Direct labor cost	$	65,000
Inventories:
Raw materials, beginning	$	20,500
Raw materials, ending	$	30,500
Work in process, beginning	$	40,500
Work in process, ending	$	70,500

  

The company uses a predetermined overhead rate to apply overhead cost to jobs. The rate for the year was $24 per machine-hour. A total of 20,200 machine-hours was recorded for 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

Requirement 1

Overheads Overapplied

$ 9,600

Requirement 2

CHANG COMPANY
Cost of Goods manufactured
Direct Material
Raw material Inventory Beginning	$ 20,500
Raw material Purchased	$ 389,500
Raw material available for use	$ 410,000
Less: Raw material Inventory Ending	$ 30,500
Direct Material Used		$ 379,500
Direct labor		$ 65,000
Manufacturing Overheads applied		$ 484,800
Total manufacturing Cost		$ 929,300
Add: Beginning Work in Progress		$ 40,500
Total Cost of Work in Progress		$ 969,800
Less: Ending Work in progress		$ 70,500
Cost of Goods Manufactured		$ 899,300

Working

Overheads applied (20200 x 24)	$ 484,800
Actual overheads	$ 475,200
Overheads Overapplied	$ 9,600