Question

Villanova Corporation is a diversified manufacturer of industrial goods that uses a job-order costing system. The company utilizes a predetermined overhead rate of $30 per machine-hour. Manufacturing overhead cost was applied to production on the basis of 18,000 machine-hours actually worked during 2019. Cost data have been supplied for the manufacturing activities during 2019:

Inventories: Raw materials, beginning $10,000 Raw materials, ending $60,000 Work in process, beginning $50,000 Work in process, ending $60,000

Manufacturing overhead costs incurred: Indirect materials $ 10,000 Indirect labor 120,000 Property taxes, factory 8,000 Supervisor’s salary, factory 80,000 Rent, factory 200,000 Heat, water, and power consumed, factory 11,000 Other costs incurred:

Purchases of raw materials (both direct and indirect) $500,000 Direct labor cost $70,000   

Required: In excel format

1. What is the amount of underapplied or overapplied overhead cost for 2019?

2. Prepare a schedule of cost of goods manufactured for 2019.

Answer 1

Solution 1:

amount of underapplied or overapplied overhead cost for 2019 = Overhead incurred - Overhead applied

= ($10,000 + $120,000 + $8,000 + $80,000 + $200,000 + $11,000) - (18000*$30)

= $111,000 overapplied

Solution 2:

Villanova Corporation
Schedule of cost of goods manufactured
Particulars	Details	Amount
Direct Material:
Beginning inventory	$10,000.00
Raw material purchases	$500,000.00
Total Raw material available	$510,000.00
Ending inventory	$60,000.00
Raw material used in production	$450,000.00
Less: Indirect materials	$10,000.00
Direct materials used		$440,000.00
Direct Labor		$70,000.00
Manufacturing overhead Applied		$540,000.00
Total manufacturing costs		$610,000.00
Add: Opening WIP		$50,000.00
Total cost of work in process		$660,000.00
Less: ending WIP		$60,000.00
Cost of goods manufactured		$600,000.00