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 to apply overhead cost to jobs. The rate for the year was $27 per machine-hour. A total of 21,500 machine-hours was recorded for the year.

overhead cost

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

Answer 1

SOLUTION

	Amount ($)
Actual Manufacturing overhead costs	569,700
Manufacturing overhead applied: (21,500 MH * $27 per MH)	580,500
Overapplied overhead cost	10,800

Chang Company

Schedule of Cost of Goods Manufactured

	Amount ($)	Amount ($)
Direct materials:
Raw materials inventory, beginning	21,800
Add: Purchases of raw materials	418,000
Raw material available for use	439,800
Less: Raw materials inventory, ending	(31,800)
Raw materials used in production	408,000
Less: Indirect materials	(16,800)	391,200
Direct labor		78,000
Manufacturing overhead cost applied to work in process		580,500
Total manufacturing costs		1,049,700
Add: Work in process inventory, beginning		41,800
		1,091,500
Less: Work in process inventory, Ending		(71,800)
Cost of goods manufactured		1,019,700