Exercise 37 Applying Overhead Cost of Goods Manufactured LO3

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 Manufacturing overhead costs incurred: Indirect materials Indirect labor Property taxes, factory Utilities, factory Depreciation, factory Insurance, factory Total actual manufacturing overhead costs incurred s 16,400 144,000 9,400 84,000 210,900 11,400 $476,100 Other costs incurredt Purchases of raw materials (both direct and indirect) Direct labor cost $414,000 74,000 Inventories: s 21,400 31,400 41,400 $ 71,400 Raw materials, beginning Work in process, beginning Work in process, ending The company uses a predetermined overhead rate of $23 per machine-hour to apply overhead cost to jobs. A total of 21100 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

Solution

1. Amount of under/over applied : Applied overhead = 21100*$23 = $485300 Actual overhead = $476100 Over applied overhead = applied overhead-actual overhead = $485300-$476100 Over applied overhead =$9200 Schedule of cost of goods manufactured : Direct material Beginning raw material inventory 21400 Add: material purchase 414000 material available for use 435400 Less: Ending raw material inventory -31400 Raw material used 404000 Less: Indirect material -16400 Direct material used in production 387600 Direct labour 74000 Applied manufacturing overhead 485300 Total manufacturing cost 946900 Add: Beginning work in process 41400 Total cost of work in process 988300 Less: Ending work in process -71400 Cost of goods manufactured 916900