The tollowing cost data relate to the manufacturing acivities of Chang Company d

Question

The tollowing cost data relate to the manufacturing acivities of Chang Company during the just completed year Manufacturing overhead costs incurred Indirect materials Indirect labor Property taxes, factory Utinies, faciory 15,600 136,000 8,600 76,000 250,700 10,600 Insurance, factory Total actual manufacturing overhead costs incurred $497,500 Other costs incurred: Purchases of mw materials (bot, direct and indirect) Direct labor cost $ 406,000 $ 66,000 S 20,600 $ 30,600 S 40,600 $ 70,600 Raw materials, ending Work in process, ending The company uses a predetermined overhead rate to apply overhead cost to jobs. The rate for the year was $25 per machine-hour. A total of 20,300 machine-hours was recorded for the year Required 1. Compute the amount of underapplied or overapplied overhead cost for the year. Overapplied ovdt1 10,000 2. Prepare a schedule of oost of goods manufactured for the year 20.600 Raw materials invetory, beginning 406,000 30 Less: Raw materials inventory, ending Raw materials used in production 396,000 S 396,000 66, Direct labor Manufacturing overhead cost applied to work in process 462,000 462,000

Explanation / Answer

1. Under/over applied overhead = Applied overhead-actual overhead

                                               = (20300*25)-497500

Over applied overhead = 10000

2. Schedule of cost of goods manufactured :

Beginning raw material 20600 Raw material purchase 406000 Less; Ending raw material (30600) Raw material used 396000 Less: Indirect material (15600) Less :Direct material used 380400 Direct labour 66000 Overhead applied (20300*25) 507500 Total manufacturing cost 953900 Beginnin work in process 40600 Total cost of work in process 994500 Less; Ending work in process (70600) Cost of goods manufactured 923900

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