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    JamesBondo's Avatar
    JamesBondo Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Mar 24, 2010, 07:46 PM
    cost of goods manufactured
    Hi,

    I have a problem that is supposed to help me practice for a test I have tomorrow, but it has only confused me more.

    Here is an image of it so you can see all of the information that I have.




    According to the program, I have successfully figured out Direct Materials and Direct Labor; however, I am having a hard time with Cost of Goods Manufactured.

    The formula I am using for COGM is Opening Good In process + Direct Material + Direct Labor + Manufacturing Overhead - Closing Goods in process = Cost of Goods Manufactured

    When I do that I get 9000+163000+426000+6000+74000+95500-20600=752900

    The program is telling me that 752900 is not correct!? I can not figure out what I have done wrong. Is my formula wrong or something simple like that?

    Thank you for your help!!
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
    		  
    #2

    Mar 24, 2010, 11:23 PM

    In calculating manufacturing overheads you need to apply overheads at 55% of $426,000 of the direct labor costs. You have taken actual costs.

    The template wants you to compute over/under applied overheads. This will be computed as the difference between Applied overheads and actual overheads. Over applied means that the COGM has been charged with more costs that actual and under applied in the opposite.
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