Task: 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......... $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.