Question

The following cost data relate to the manufacturing activities of Chang Company during the just completed year:Manufacturing overhead costs incurred:Indirect materials $ 15,000Indirect labor 130,000Property taxes, factory 8,000Utilities, factory 70,000Depreciation, factory 240,000Insurance, factory 10,000Total actual manufacturing overhead costs incurred $ 473,000Other costs incurred:Purchases of raw materials (both direct and indirect) $ 400,000Direct labor cost $ 60,000Inventories:Raw materials, beginning $ 20,000Raw materials, ending $ 30,000Work in process, beginning $ 40,000Work in process, ending $ 70,000The company uses a predetermined overhead rate of $25 per machine-hour to apply overhead cost to jobs. A total of 19,400 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.

Answer 1

Answer:

See below

Explanation:

1.

Actual manufacturing overhead cost incurred

$473,000

Less manufacturing overhead cost applied $25 × 19,400

($485,000)

Over applied overhead

$12,000

2.

Raw materials at the beginning

$20,000

Add raw materials purchased

$400,000

Raw materials available for use

$420,000

Less raw materials at the end

($30,000)

Raw materials used in production

$390,000

Less indirect materials

($15,000)

Add direct labor

$60,000

Add manufacturing overhead applied

$485,000

Total manufacturing cost

$920,000

Add work in process inventory at the beginning

$40,000

Total work in process inventory

$960,000

Less work in process inventory at the end

($70,000)

Cost of goods manufactured.

$890,000