Question

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

Manufacturing overhead costs incurred:
Indirect materials	$	16,800
Indirect labor		148,000
Property taxes, factory		9,800
Utilities, factory		88,000
Depreciation, factory		295,300
Insurance, factory		11,800
Total actual manufacturing overhead costs incurred	$	569,700
Other costs incurred:
Purchases of raw materials (both direct and indirect)	$	418,000
Direct labor cost	$	78,000
Inventories:
Raw materials, beginning	$	21,800
Raw materials, ending	$	31,800
Work in process, beginning	$	41,800
Work in process, ending	$	71,800

The company uses a predetermined overhead rate of $27 per machine-hour to apply overhead cost to jobs. A total of 21,500 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.

Prepare a schedule of cost of goods manufactured for the year.

Chang Company
Schedule of Cost of Goods Manufactured
Direct materials:
Beginning raw materials inventory	$21,800
Add: Purchases of raw materials	401,200
Total raw materials available
	423,000
Raw materials used in production
Less: Raw materials inventory, ending	31,800	$391,200
Direct labor		78,000
Total manufacturing costs		469,200
Total manufacturing costs
Add: Manufacturing overhead cost		580,500
Less: Ending work in process inventory		71,800
Cost of goods manufactured		$1,019,700

Prepare a schedule of cost of goods manufactured for the year.

Chang Company
Schedule of Cost of Goods Manufactured
Direct materials:
Beginning raw materials inventory	$21,800
Add: Purchases of raw materials	401,200
Total raw materials available
	423,000
Raw materials used in production
Less: Raw materials inventory, ending	31,800	$391,200
Direct labor		78,000
Total manufacturing costs		469,200
Total manufacturing costs
Add: Manufacturing overhead cost		580,500
Less: Ending work in process inventory		71,800
Cost of goods manufactured		$1,019,700

Can someone please explain to me how to do this? These are the numbers I get but I keep getting the answers wrongs. When explaining please put the answers in bold. Thank you!

Answer 1

Solution 1:

Total overhead incurred = $569,700

Overhead applied = $580,500

Overapplied overhead = $580,500 - $569,700 = $10,800

Solution 2:

Chang Company
Schedule of Cost of Goods Manufactured
Particulars		Amount
Direct materials:
Beginning raw materials inventory	$21,800
Add: Purchases of raw materials	418,000
Total raw materials available	$439,800
Less:Ending inventory of Raw material	31,800
Raw materials used in production	$408,000
Less: Indirect material	16,800
Direct material used in production		$391,200
Direct labor		78,000
Prime cost		469,200
Manufacturing overhead cost applied (21500*$27)		580,500
Total manufacturing cost for the period		1,049,700
Add: Beginning work in process inventory		41800
Less: Ending work in process inventory		71,800
Cost of goods manufactured		$1,019,700