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    Finding the Manufacturing Overhead Applied

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    Big Thunder Co. incurred the following costs during April:

    Raw materials purchased $99,225
    Direct labor ($15 per hour) 123,750
    Manufacturing overhead (actual) 303,175
    Selling expenses 67,050
    Administrative expenses 33,075
    Interest expense 11,490

    Manufacturing overhead is applied on the basis of $37.50 per direct labor hour. Assume that overapplied or underapplied overhead is transferred to cost of goods sold only at the end of the year. During the month, 7,500 units of product were manufactured and 7,950 units of product were sold. On April 1 and April 30, Big Thunder Co. carried the following inventory balances:

    April 1 April 30
    Raw materials $ 41,160 $ 37,590
    Work in process 111,720 119,640
    Finished goods 88,000 56,320

    Requirement 1:
    (a) Prepare a statement of cost of goods manufactured for the month of April.

    Big Thunder Co.
    Statement of Cost of Goods Manufactured
    For the month of April

    Raw Materials
    Inventory April 1 $ 41160
    Purchased During April 99225
    Raw materials available for use $140,385
    Less: Inventory, April 30 -37590
    Cost of Materials Used $ 102795
    Direct Labor Cost Incurred 123750
    Manufacturing Overhead Applied ?????????

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    Solution Summary

    The manufacturing overhead applied is found for Big Thunder Co. An Excel file is used to outline the calculations.