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:

The company uses a predetermined overhead rate of $24 per machine-hour to apply overhead cost to jobs. A total of 21,200 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.

    Manufacturing overhead costs incurred: Indirect materials $ 16,500 Indirect labor 145,000 Property taxes, factory 9,500 Utilities, factory 85,000 Depreciation, factory 231,700 Insurance, factory 11,500 Total actual manufacturing overhead costs incurred $ 499,200 Other costs incurred: Purchases of raw materials (both direct and indirect) $ 415,000 Direct labor cost $ 75,000 Inventories: Raw materials, beginning $ 21,500 Raw materials, ending $ 31,500 Work in process, beginning $ 41,500 Work in process, ending $ 71,500

Explanation / Answer

1. Compute the amount of underapplied or overapplied overhead cost for the year.

Actual overhead = 499200

Applied overhead = 24*21200 = 508800

Overapplied overhead = 508800-499200 = 9600

2)  Prepare a schedule of cost of goods manufactured for the year.

Direct material Beginning raw material 21500 Raw material purchase 415000 Total material available for use 436500 Less: Ending raw material -31500 Raw material used in production 405000 Less: Indirect material -16500 Direct material used 388500 Direct labour 75000 Overhead applied 508800 Total manufacturing cost 972300 Beginning work in process 41500 Total cost of work in process 1013800 Less: Ending work in process -71500 Cost of goods manufactured 942300

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.