The Following Cost Data Relate to the Manufacturing Activities of Falco

question 135

Essay

The following cost data relate to the manufacturing activities of Falco Industries during the just completed year:
$\begin{array}{lrr}\text { Total actual manufacturing overhead costs incurred (including } \$ 15,000\\ \text {of indirect materials) } &\$353,000\\ \text { Purchases of raw materials (both direct and indirect)} &\$250,000\\ \text { Direct labor cost} &\$135,000\\ \text {Inventories: } &\\ \text { Raw materials, beginning } &\$10,000\\ \text { Raw materials, ending} &\$15,000\\ \text { Work-in-Process, beginning} &\$20,000\\ \text { Work-in-Process, ending } &\$35,000\\\end{array}$

The company uses a predetermined overhead rate to apply manufacturing overhead cost to production. The predetermined overhead rate for the year was $15 per machine-hour. A total of 23,000 machine-hours was recorded for the year.
Required:
a. Compute the amount of underapplied or overapplied overhead cost for the year.
b. Prepare a Schedule of Cost of Goods Manufactured for the year.

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Definitions:

Fabrication Department

A division or unit within a manufacturing firm dedicated to the assembly or production of goods, where raw materials are transformed into finished products.

Multiple Department Rate System

An accounting system used to allocate indirect costs to individual departments based on varying rates, reflecting the different resource usage in each department.

Production Departments

Specific areas or divisions within a manufacturing facility where production activities related to goods are carried out.

Factory Overhead Rate

A calculation used to allocate all indirect manufacturing costs to produced goods.