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The following cost data relate to the manufacturing activities of Chang Company during the just completed year: Manufacturing overhead costs incurred: Indirect materials $ 15,200 Indirect labor 132,000 Property taxes, factory 8,200 Utilities, factory 72,000 Depreciation, factory 152,400 Insurance, factory 10,200 Total actual manufacturing overhead costs incurred $ 390,000 Other costs incurred: Purchases of raw materials (both direct and indirect) $ 402,000 Direct labor cost $ 62,000 Inventories: Raw materials, beginning $ 20,200 Raw materials, ending $ 30,200 Work in process, beginning $ 40,200 Work in process, ending $ 70,200 The company uses a predetermined overhead rate of $20 per machine-hour to apply overhead cost to jobs
The following cost data relate to the manufacturing activities of Chang Company during the just completed year:
| Manufacturing overhead costs incurred: | ||
| Indirect materials | $ | 15,200 |
| Indirect labor | 132,000 | |
| Property taxes, factory | 8,200 | |
| Utilities, factory | 72,000 | |
| Depreciation, factory | 152,400 | |
| Insurance, factory | 10,200 | |
| Total actual manufacturing overhead costs incurred | $ | 390,000 |
| Other costs incurred: | ||
| Purchases of raw materials (both direct and indirect) | $ | 402,000 |
| Direct labor cost | $ | 62,000 |
| Inventories: | ||
| Raw materials, beginning | $ | 20,200 |
| Raw materials, ending | $ | 30,200 |
| Work in process, beginning | $ | 40,200 |
| Work in process, ending | $ | 70,200 |
The company uses a predetermined overhead rate of $20 per machine-hour to apply overhead cost to jobs. A total of 19,900 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.
Expert Solution
1.
Underapplied or overapplied overhead = Applied manufacturing overhead - Actual manufacturing overhead
Underapplied or overapplied overhead = $398,000 (19,900*$20) - 390,000
Overapplied manufacturing overhead = $8,000
2.
| Schedule of Cost of Goods Manufactured | ||
| Beginning raw materials | $20,200 | |
| Raw material purchases | 402,000 | |
| Total raw material available | 422,200 | |
| Ending raw materials | (30,200) | |
| Raw material consumed | 392,000 | |
| Indirect material | (15,200) | |
| Direct material used | $376,800 | |
| Direct labor cost | 62,000 | |
| Manufacturing overhead applied (19,900*$20) | 398,000 | |
| Total manufacturing cost | 836,800 | |
| Beginning work in process | 40,200 | |
| Ending work in process | (70,200) | |
| Cost of goods manufactured | $806,800 | |
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