The following cost data relate to the manufacturing activities of Chang Company during the just completed year:Manufacturing overhead costs incurred: Indirect materials$ 17,000Indirect labor150,000Property taxes, factory10,000Utilities, factory90,000Depreciation, factory147,000Insurance, factory12,000Total actual manufacturing overhead costs incurred$ 426,000Other costs incurred: Purchases of raw materials (both direct and indirect)$ 420,000Direct labor cost$ 80,000Inventories: Raw materials, beginning$ 22,000Raw materials, ending$ 32,000Work in process, beginning$ 42,000Work in process, ending$ 72,000 The company uses a predetermined overhead rate of $20 per machine-hour to apply overhead cost to jobs. A total of 21,700 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.

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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	$ 17,000
Indirect labor	150,000
Property taxes, factory	10,000
Utilities, factory	90,000
Depreciation, factory	147,000
Insurance, factory	12,000
Total actual manufacturing overhead costs incurred	$ 426,000
Other costs incurred:
Purchases of raw materials (both direct and indirect)	$ 420,000
Direct labor cost	$ 80,000
Inventories:
Raw materials, beginning	$ 22,000
Raw materials, ending	$ 32,000
Work in process, beginning	$ 42,000
Work in process, ending	$ 72,000

The company uses a predetermined overhead rate of $20 per machine-hour to apply overhead cost to jobs. A total of 21,700 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.

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