Question

The following cost data relate to the manufacturing activities of Black Company during the just completed...

The following cost data relate to the manufacturing activities of Black Company during the just completed year:

Manufacturing overhead costs incurred:
Property taxes, factory $ 3,000
Utilities, factory 4,900
Indirect labor 9,900
Depreciation, factory 24,000
Insurance, factory 6,000
Total actual manufacturing overhead costs $ 47,800
Other costs incurred:
Purchases of raw materials $ 31,900
Direct labor cost $ 41,000
Inventories:
Raw materials, beginning $ 8,300
Raw materials, ending $ 6,300
Work in process, beginning
$ 5,300
Work in process, ending $ 7,900

The company uses a predetermined overhead rate to apply overhead cost to jobs. The rate for the year was $5 per machine-hour; a total of 11,400 machine-hours was recorded for the year. All raw materials ultimately become direct materials—none are classified as indirect materials.

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 using the indirect method. (Enter all deductions as a negative.)

Black Company
Schedule of Cost of Goods Manufactured
Direct materials:
Raw materials available for use
Raw materials used in production
Total manufacturing cost
Cost of goods manufactured

Homework Answers

Answer #1

Answer 1.

Manufacturing Overhead applied = Predetermined Overhead Rate * Number of machine-hours
Manufacturing Overhead applied = $5 * 11,400
Manufacturing Overhead applied = $57,000

Actual Manufacturing Overhead = $47,800

Overapplied Overhead Cost = Manufacturing Overhead applied - Actual Manufacturing Overhead
Overapplied Overhead Cost = $57,000 - $47,800
Overapplied Overhead Cost = $9,200

Answer 2.

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