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 $27 per machine-hour to apply overhead cost to jobs. A total of 21,500 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.

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

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

Can someone please explain to me how to do this? These are the numbers I get but I keep getting the answers wrongs. When explaining please put the answers in bold. Thank you!

    Manufacturing overhead costs incurred: Indirect materials $ 16,800 Indirect labor 148,000 Property taxes, factory 9,800 Utilities, factory 88,000 Depreciation, factory 295,300 Insurance, factory 11,800 Total actual manufacturing overhead costs incurred $ 569,700 Other costs incurred: Purchases of raw materials (both direct and indirect) $ 418,000 Direct labor cost $ 78,000 Inventories: Raw materials, beginning $ 21,800 Raw materials, ending $ 31,800 Work in process, beginning $ 41,800 Work in process, ending $ 71,800

Explanation / Answer

Solution 1:

Total overhead incurred = $569,700

Overhead applied = $580,500

Overapplied overhead = $580,500 - $569,700 = $10,800

Solution 2:

Chang Company Schedule of Cost of Goods Manufactured Particulars Amount Direct materials: Beginning raw materials inventory $21,800 Add: Purchases of raw materials 418,000 Total raw materials available $439,800 Less:Ending inventory of Raw material 31,800 Raw materials used in production $408,000 Less: Indirect material 16,800 Direct material used in production $391,200 Direct labor 78,000 Prime cost 469,200 Manufacturing overhead cost applied (21500*$27) 580,500 Total manufacturing cost for the period 1,049,700 Add: Beginning work in process inventory 41800 Less: Ending work in process inventory 71,800 Cost of goods manufactured $1,019,700

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