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 15,200 132,000 8,200 72,000 152,400 10,200 Total actual manufacturing overhead costs incurred $ 390,000 $ 402,000 $ 62,000 Other costs incurred: Purchases of raw materials (both direct and indirect) Direct labor cost Inventories: Raw materials, beginning Raw materials, ending Work in process, beginning Work in process, ending $ 20,200 $ 30,200 $ 40,200 $ 70,200 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 19,900 machine-hours was recorded for the year. Required: 1. Compute the amount of underapplied or overapplied overhead cost for the year. Answer is complete and correct. Overapplied overhead s 8,000 cost

Explanation / Answer

Cost of goods manufactured schedule :

Direct material used Raw material beginning inventory 20200 Raw material purchase 402000 Raw material available for use 422200 Less: Ending inventory of raw material -30200 Raw material used in production 392000 Less: Indirect material -15200 Direct material used in production 376800 Direct labour 62000 Manufacturing overhead applied 398000 Total manufacturing cost 836800 Beginning work in process 40200 Total cost of work in process 877000 Less; Ending work in process -70200 Cost of goods manufactured 806800

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