Question

The following cost data relate to the manufacturing activities of Chang Company during the just completed year: Manufacturing overhead costs incurred: Indirect materials $ 16,700Indirect labor 147,000Property taxes, factory 9,700Utilities, factory 87,000Depreciation, factory 273,900Insurance, factory 11,700Total actual manufacturing overhead costs incurred $ 546,000Other costs incurred: Purchases of raw materials (both direct and indirect) $ 417,000Direct labor cost $ 77,000Inventories: Raw materials, beginning $ 21,700Raw materials, ending $ 31,700Work in process, beginning $ 41,700Work in process, ending $ 71,700 The company uses a predetermined overhead rate of $26 per machine-hour to apply overhead cost to jobs. A total of 21,400 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

Instructions are listed below

Step-by-step explanation:

Giving the following information:

Manufacturing overhead costs incurred:

Indirect materials $16,700

Indirect labor $147,000

Property taxes, factory $9,700

Utilities, factory $87,000

Depreciation, factory $273,900

Insurance, factory $11,700

Total actual manufacturing overhead costs incurred $ 546,000

Other costs incurred:

Purchases of raw materials (direct and indirect) $417,000

Direct labor cost $ 77,000

Inventories:

Raw materials, beginning $ 21,700

Raw materials, ending $ 31,700

Work in process, beginning $ 41,700

Work in process, ending $ 71,700

The company uses a predetermined overhead rate of $26 per machine-hour to apply overhead cost to jobs.

A total of 21,400 machine-hours were used during the year.

A) First, we need to calculate the allocated overhead:

Allocated overehad= overhead rate*actual hours= 26*21400= $556,400

Over/under allocation= real overhead - allocated overhead= 546,000 - 556,400= 10,400 overallocated.

B)

cost of goods manufactured= beginning work in process + direct materials + direct labor + allocated overhead - ending work in process

cost of goods manufacured= 41700 + (21700 + 417000 - 31700) + 77000 + 556400 - 71700= $1,010,400