2 Exercise 37 Applying Overhead Cost of Goods Manufactured L

2 Exercise 3-7 Applying Overhead; Cost of Goods Manufactured [LO3-3, LO3-4] The following cost data relate to the manufacturing activities of Chang Company during the just completed year 66.66 points Manufacturing overhead costs incurred: Indirect materials Indireet labor Property taxes, factory Utilities, factory Depreciation, factory Insurance, factory Total actual manufacturing overhead costs incurred 5 15,300 133,000 8,300 73,000 152,100 10,300 Hint Print References other costs incurred: Purchases of raw materials (both direct and indirect) Direct labor cost $403,000 63,000 Inventories: Raw materials, beginning Raw materials, ending Work in process,beginning Work in process, ending s 20,300 30,300 s 40,300 s 70,300 The company uses a predetermined overhead rate of $20 per machine-hour to apply overhead cost to jobs. A total of 20,000 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 Complete this question by entering your answers in the tabs below. Next> K Prev 2 of 3

Solution

Req 1 Under/Over-applied overheads: Actual manufacturing overheads: Indirect material 15300 Indirect labour 133000 Property taxes, factory 8300 Utilities factory 73000 Depreciation 152100 Insurance 10300 Total Overheads incurred 392000 Overheads applied (20000 MH @ 20) 400,000 Over-appplied Overheads 8000 Schedule of Cost of Goods manufactured Direct material Beginning Inventory off material 20300 Add: Purchase 403000 Total Material available 423300 Less: Ending inventory 30300 Raw material used in production 393000 Less: Indirect material 15300 Direct material consumed 377700 Direct labour 63000 Manufacturing overheads applied 400000 Total manufacturing cost 840700 Add: Beginning Inventory of WIP 40300 Cost of goods manufacturing 881000 Less: Ending Inventory of WIP 70300 Cost of Goods manufactured 810700