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.

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facundobuzzetti facundobuzzetti · Answer 1 · 2020-10-05T18:07:15+02:00

Answer:

Instructions are below.

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