The following cost data relate to the manufacturing activities of Chang Company

Question

The following cost data relate to the manufacturing activities of Chang Company during the just completed year Manufacturing overhead costs incurred Indirect materials Indirect labor Property taxes, factory Utilities, factory Depreciation, factory Insurance, factory S 15,900 139,000 8,900 79,000 150,300 10,900 Total actual manufacturing overhead costs incurred $ 404,000 Other costs incurred Purchases of raw materials (both direct and indirect) Direct labor cost 409,000 S 69,000 Inventories Raw materials, beginning Raw materials, ending Work in process, beginning Work in process, ending $ 20,900 $ 30,900 $ 40,900 $ 70.900 The company uses a predetermined overhead rate to apply overhead cost to jobs. The rate for the year was $20 per machine-hour. A total of 20,600 machine-hours was récorded for the year Required: 1. Compute the amount of underapplied or overapplied overhead cost for the year overhead cost

Explanation / Answer

1.overapplied overhead cost $8,000.

working:

appplied ovehead = rate * machine hours

=>$20 * 20,600 machine hours

=>$412,000.

actual overhead = 404,000

since applied overhead is greater than actual overhead, we have overapplied overhead of ($412,000 - 404,000)=>$8,000.

(30,900)

direct materials raw materials inventory beginining 20,900 add:purchases of raw material 409,000 raw materials available for useq 429,900 less:raw materials inventory, ending

(30,900)

raw materials used in production 399,000 less:indirect materials 15,900 383,100 direct labour 69,000 manufacturing overhead cost applied to work in process 412,000 total manufacturing cost 864,100 add:work in process inventory, beginning 40,900 905,000 less:work in process inventory, ending (70,900) cost of goods manufactured 834,100

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