The following cost data relate to the manufacturing activities of Black Company during the just completed year:
Question:
Manufacturing overhead costs:
Property taxes, factory . . . . . . . . . . . . . . . . . . . . . . . $ 3,000
Utilities, factory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Indirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Depreciation, factory. . . . . . . . . . . . . . . . . . . . . . . . . 24,000
Insurance, factory . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Total actual manufacturing overhead costs . . . . . . . . $48,000
Other costs incurred:
Purchases of raw materials. . . . . . . . . . . . . . . . . . . . $32,000
Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,000
Inventories:
Raw materials, beginning . . . . . . . . . . . . . . . . . . . . . $8,000
Raw materials, ending . . . . . . . . . . . . . . . . . . . . . . . $7,000
Work in process, beginning. . . . . . . . . . . . . . . . . . . . $6,000
Work in process, ending . . . . . . . . . . . . . . . . . . . . . . $7,500
The company uses a predetermined overhead rate to apply overhead cost to production. The rate for the year was $5 per machine-hour; a total of 10,000 machine-hours was recorded for the year. All raw materials ultimately become direct materials—none are classified as indirect materials.
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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Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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