Question

The following cost data relate to the manufacturing activities of Chang Company during the just completed year: Manufacturing overhead costs incurred: Indirect materials $ 15,300 Indirect labor 133,000 Property taxes, factory 8,300 Utilities, factory 73,000 Depreciation, factory 152,100 Insurance, factory 10,300 Total actual manufacturing overhead costs incurred $ 392,000 Other costs incurred: Purchases of raw materials (both direct and indirect) $ 403,000 Direct labor cost $ 63,000 Inventories: Raw materials, beginning $ 20,300 Raw materials, ending $ 30,300 Work in process, beginning $ 40,300 Work in process, ending $ 70,300 The company uses a predetermined overhead rate of $20 per machine-hour to apply overhead cost to jobs. A total of 20,000 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

The amount of overapplied overhead cost for the year is $8,000. The schedule of cost of goods manufactured for the year is as follows: Direct Materials (Beginning Inventory: $20,300, Ending Inventory: $30,300, Total: $10,000), Direct Labor: $63,000, Manufacturing Overhead: $392,000, Total Manufacturing Costs: $465,000.

Step-by-step explanation:

To compute the amount of underapplied or overapplied overhead cost for the year, we need to calculate the amount of overhead cost applied and compare it to the actual overhead cost incurred. The predetermined overhead rate is $20 per machine-hour and a total of 20,000 machine-hours were used. Therefore, the overhead cost applied is 20,000 machine-hours x $20 per machine-hour = $400,000. The actual manufacturing overhead costs incurred were $392,000. Therefore, the underapplied or overapplied overhead cost is $400,000 - $392,000 = $8,000 overapplied.

To prepare a schedule of cost of goods manufactured for the year, we need to calculate the total manufacturing costs incurred during the year. The total manufacturing costs include direct materials, direct labor, and manufacturing overhead. The direct materials cost is the difference between the beginning and ending raw materials inventory ($30,300 - $20,300 = $10,000). The direct labor cost is given as $63,000. The manufacturing overhead cost is the total actual manufacturing overhead costs incurred ($392,000). Therefore, the total manufacturing costs incurred is $10,000 + $63,000 + $392,000 = $465,000.

Answer:

The amount of underapplied or overapplied overhead cost for the year is $8,000 overapplied.

The schedule of cost of goods manufactured for the year is as follows:

Direct MaterialsBeginning Inventory$20,300Ending Inventory$30,300Total Direct Materials$10,000Direct Labor$63,000Manufacturing Overhead$392,000Total Manufacturing Costs$465,000

Answer 2

Instructions are below.

Step-by-step explanation:

First, we need to allocate overhead using the following formula:

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

Allocated MOH= 20*20,000= $400,000

Now, we calculate the over/under allocation:

Under/over applied overhead= real overhead - allocated overhead

Under/over applied overhead= 392,000 - 400,000

Under/over applied overhead= $8,000 overapplied

Finally, the cost of goods manufactured:

beginning WIP= 40,300

Direct material= (20,300 + 403,000 - 30,300)= 393,000

Direct labor= 63,000

Allocated overhead= 400,000

Ending WIP= (70,300)

Cost of goods manufactured= 826,000