Question

The following cost data relate to the manufacturing activities of Chang Company during the just completed year: Manufacturing overhead costs incurred: Indirect materials $ 16,200 Indirect labor 142,000 Property taxes, factory 9,200 Utilities, factory 82,000 Depreciation, factory 169,900 Insurance, factory 11,200 Total actual manufacturing overhead costs incurred $ 430,500 Other costs incurred: Purchases of raw materials (both direct and indirect) $ 412,000 Direct labor cost $ 72,000 Inventories: Raw materials, beginning $ 21,200 Raw materials, ending $ 31,200 Work in process, beginning $ 41,200 Work in process, ending $ 71,200 The company uses a predetermined overhead rate to apply overhead cost to jobs. The rate for the year was $21 per machine-hour. A total of 20,900 machine-hours was recorded for 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:

Total actual manufacturing overhead costs incurred $ 430,500

The company uses a predetermined overhead rate to apply overhead cost to jobs. The rate for the year was $21 per machine-hour. A total of 20,900 machine-hours was recorded for the year.

1)

First, we need to allocate overhead based on actual machine-hours:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 21*20,900= $438,900

Now, we can calculate over/underapplied overhead:

Over/under allocation= real MOH - allocated MOH

Over/under allocation= 430,500 - 438,900= 8,400 overapplied

2)

cost of goods manufactured:

beginning WIP= 41,200

direct materials= 21,200 + 412,000 - 31,200= 402,000

direct labor= 72,000

Allocated overhead= 438,900

Ending WIP= (71,200)

COGM= 882,900