The following cost data relate to the manufacturing activities of Black Company during the just completed year:
Manufacturing overhead costs:
Property taxes, factory.......................................... $3000
Utilities, factory.................................................... 5000
Indirect labor........................................................ 10000
Depreciation, factory............................................. 24000
Insurance, factory................................................. 6000
Total actual manufacturing overhead costs................ 48000
Other cost incurred:
Purchases of raw materials..................................... 32000
Direct labor cost................................................... 40000
Inventories:
Raw materials, beginning........................................ 8000
Raw materials, ending............................................ 7000
Work in process, beginning...................................... 6000
Work in process, ending.......................................... 7500
The company uses a predetermined overhead rate to apply overhead cost to jobs. 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.