manufacturing overhead costs incurred: indirect materials $15,000 indirect labor $130,000 property taxes…

manufacturing overhead costs incurred: indirect materials $15,000 indirect labor $130,000 property taxes, factory $8,000 utilities, factory $70,000 depreciation, factory $240,000 insurance, factory $10,000 total actual manufacturing overhead costs incurred $473,000 other costs incurred: purchases of raw materials (both direct and indirect) $400,000 direct labor cost $60,000 inventories: raw materials, beginning $20,000 raw materials, ending $30,000 work in process, beginning $40,000 work in process, ending $70,000 the company uses a predetermined overhead rate of $25 per machine - hour to apply overhead cost to jobs. a total of 19,400 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. required 1 required 2 prepare a schedule of cost of goods manufactured for the year. chang company schedule of cost of goods manufactured beginning work in process inventory $40,000 direct materials: beginning raw materials inventory $20,000 add: purchases of raw materials 400,000 total raw materials available 420,000 less: ending raw materials inventory 30,000 raw materials used in production 390,000 less: indirect materials used in production direct materials used in production $390,000 direct labor 60,000 manufacturing overhead applied to work in process 485,000 total manufacturing costs added to production 935,000 total manufacturing costs to account for 975,000 less: ending work in process inventory 70,000 cost of goods manufactured

manufacturing overhead costs incurred: indirect materials $15,000 indirect labor $130,000 property taxes, factory $8,000 utilities, factory $70,000 depreciation, factory $240,000 insurance, factory $10,000 total actual manufacturing overhead costs incurred $473,000 other costs incurred: purchases of raw materials (both direct and indirect) $400,000 direct labor cost $60,000 inventories: raw materials, beginning $20,000 raw materials, ending $30,000 work in process, beginning $40,000 work in process, ending $70,000 the company uses a predetermined overhead rate of $25 per machine - hour to apply overhead cost to jobs. a total of 19,400 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. required 1 required 2 prepare a schedule of cost of goods manufactured for the year. chang company schedule of cost of goods manufactured beginning work in process inventory $40,000 direct materials: beginning raw materials inventory $20,000 add: purchases of raw materials 400,000 total raw materials available 420,000 less: ending raw materials inventory 30,000 raw materials used in production 390,000 less: indirect materials used in production direct materials used in production $390,000 direct labor 60,000 manufacturing overhead applied to work in process 485,000 total manufacturing costs added to production 935,000 total manufacturing costs to account for 975,000 less: ending work in process inventory 70,000 cost of goods manufactured

Answer

Explanation:

Step1: Calculate applied overhead

The company uses a predetermined overhead rate of $25 per machine - hour and 19,400 machine - hours were used. So, the applied overhead is the product of the predetermined rate and the actual machine - hours. $25\times19400 = 485000$

Step2: Determine over/under - applied overhead

The actual manufacturing overhead costs incurred is $473000$. Compare the applied overhead ($485000$) with the actual overhead ($473000$). Overapplied overhead=Applied overhead - Actual overhead $485000−473000 = 12000$

Step3: Prepare cost of goods manufactured schedule (partial explanation as some values are already given in the table)

  1. Direct materials:
    • Beginning raw materials inventory is $20000$.
    • Purchases of raw materials is $400000$. So total raw materials available is $20000 + 400000=420000$.
    • Ending raw materials inventory is $30000$. So raw materials used in production is $420000 - 30000 = 390000$. Since no indirect materials are subtracted in the given table, we assume all used materials are direct.
  2. Direct labor is given as $60000$.
  3. Manufacturing overhead applied to work in process is $485000$ (calculated in Step1).
  4. Total manufacturing costs added to production:
    • Add direct materials ($390000$), direct labor ($60000$) and manufacturing overhead applied ($485000$).
    • $390000+60000 + 485000=935000$
  5. Total manufacturing costs to account for:
    • Add beginning work in process inventory ($40000$) to total manufacturing costs added to production ($935000$).
    • $40000+935000 = 975000$
  6. Cost of goods manufactured:
    • Subtract ending work in process inventory ($70000$) from total manufacturing costs to account for ($975000$).
    • $975000−70000 = 905000$

Answer:

  1. The amount of overapplied overhead cost for the year is $12000$.
Cost Item Amount ($)
Beginning work in process inventory $40000$
Direct materials:
Beginning raw materials inventory $20000$
Add: Purchases of raw materials $400000$
Total raw materials available $420000$
Less: Ending raw materials inventory $30000$
Raw materials used in production $390000$
Direct labor $60000$
Manufacturing overhead applied to work in process $485000$
Total manufacturing costs added to production $935000$
Total manufacturing costs to account for $975000$
Less: Ending work in process inventory $70000$
Cost of goods manufactured $905000$