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 Manufacturing overhead costs inourred Property taxes, factory Utities, factory Indirect laber Depreciation, factory Insuranoe, factory 3,000 5,000 10,000 24,000 6,000 $48.000 Totai actual manudacturing averhead costs Other costs incurred Purchases of raw materials Direct labor cost 32.000 40,000 Raw materials, beginning Raw materials, ending Work in process, beginning S 8,000 s 7,000 6,000 $ 7,500 Work in process, ending 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 materiais ultimately become direct materials none are classified as indirect ma Required 1. Compute the amount of underapplied or overapplied ovehead cost for the year

Explanation / Answer

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

                                            = (10000*5)-48000

Over applied overhad = 2000

2. Schedule of cost of goods manufactured :

Direct material : Beginning raw material 8000 Raw material purchase 32000 Raw material available for use 40000 less; Ending raw material (7000) Raw material used in production 33000 Direct labour 40000 manufacturing overhead applied 50000 Total manufacturing cost 123000 Beginning work in process 6000 Less; Ending work in process (7500) Cost of goods manufactured 121500

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