For Accounting Genius Only

1. Duggan Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $276,100 for the year, and machine usage is estimated at 125,500 hours.

For the year, $291,988 of overhead costs are incurred and 130,200 hours are used.

Compute the manufacturing overhead rate for the year. (Round answers to 2 decimal places, e.g. 1.25.)

Manufacturing overhead rate $______________________ per machine hour

2. The ledger of Custer Company has the following work in process account.

Work in Process-Painting

5/31 Balance 4,600	5/31 Transferred out?
5/31 Materials 5,840
5/31 Labor 4,770
5/31 Overhead 1,830
5/31 Balance ?

Production records show that there were 540 units in the beginning inventory, 30% complete, 1,580 units started, and 1,600 units transferred out. The beginning work in process had materials cost of $2,930 and conversion costs of $1,670. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.

(a) How many units are in process at May 31?

Work in process, May 31 _________________________________ units

(b) What is the unit materials cost for May? (Round unit costs to 2 decimal places, e.g. 2.25.)

The unit materials cost for May $ __________

(c) What is the unit conversion cost for May? (Round unit costs to 2 decimal places, e.g. 2.25.)

The unit conversion cost for May $___________

3. Wilkins Inc. has two types of handbags: standard and custom. The controller has decided to use a plant wide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company’s operations.

Standard Custom

Direct labor costs $53,600 $115,000

Machine hours 1,430 1,490

Setup hours 95 390

Total estimated overhead costs are $301,800. Overhead cost allocated to the machining activity cost pool is $197,800, and $104,000 is allocated to the machine setup activity cost pool.

Compute the overhead rate using the traditional (plant wide) approach. (Round answers to 2 decimal places, e.g. 12.25 %.)

Predetermined overhead rate____________ % of direct labor cost.