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

Question

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

The company uses a predetermined overhead rate to apply overhead cost to jobs. The rate for the year was $5 per machine-hour; a total of 10,000 machine-hours was recorded for the year. All raw materials ultimately become direct materials—none are classified as indirect materials.

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

Prepare a schedule of cost of goods manufactured for the year using the indirect method. (Enter all deductions as a negative.)

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

Explanation / Answer

Amt $ Predetermined OH rate per m/c Hr=                   5.00 Total recorded machine hour in the year               10,000 Manufacturing Overhead applied during the year         50,000.00 Actual Manufacturing Overhead incurred during the year         48,000.00       1.00 Overapplied Overhead =           2,000.00       2.00 Schedule of Cost of Goods Manufactured Opening Inventory Raw materials           8,000.00 Add Purchase of raw materials         32,000.00 Less; Raw materials inventory ending         (6,000.00) Raw materials consumed         34,000.00 Add : Direct Labor         40,000.00 Add: Manufacturing Overhead applied         50,000.00 Total Manufacturing Cost      124,000.00 Add : Opening inventory WIP           6,000.00 Less: Closing inventory WIP         (7,500.00) Cost Of Goods Manufactured= $ 122,500.00

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