EXERCISE 3-13 Applying Overhead; Cost of Goods Manufactured [LO2, LO6, LO7]
The following cost data relate to the manufacturing activities of Black Company during the just completed year:
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Property taxes, factory . . . . . . . . . . . . . . . . . . . . . . . . . . .
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$3,000
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Utilities, factory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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5,000
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Indirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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10,000
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Depreciation, factory . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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24,000
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Insurance, factory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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6,000
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Total actual manufacturing overhead costs . . . . . . . . . . . .
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$48,000
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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.