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 Total actual manufacturing overhead costs incurred $ 15,200 132,000 8,200 72,800 152,400 10,200 $390,000 Other costs incurred: Purchases of raw materials (both direct and indirect)$402,80e Direct labor cost s 62,00 Inventories: Raw materials, beginning Raw materials, ending Work in process, beginning Work in process, ending $ 20,200 $ 30,200 s 40,200 70,200 company uses a predetermined overhead rate of $20 per machine-hour to apply overhead cost to jobs. A total of 19,900 machine-hours were used during the year.

Explanation / Answer

1. Overhead cost overapplied : $ 8,000.

Overhead applied = 19,900 machine hours x $ 20 per machine hour = $ 398,000.

Overhead incurred = $ 390,000.

2.

Overhead overapplied = $ 398,000 - $ 390,000 = $ 8,000.

Chang Company Schedule of Cost of Goods Manufactured $ $ Direct Materials Raw Materials, beginning 20,200 Purchase of Raw Materials 386,800 Total Raw Materials Available 407,000 Less: Raw Materials Ending (30,200) Direct Materials used in Production 376,800 Direct Labor 62,000 Manufacturing Overhead Cost Applied 398,000 Total Manufacturing Costs 836,800 Work in Process, Beginning 40,200 Total cost of Work in Process 877,000 Less: Work in Process, Ending (70,200) Cost of Goods Manufactured $ 806,800

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