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Corporation analysis 2

Question 1

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

Work in Process—Painting
5/1	Balance	4,520	5/31	Transferred out	?
5/31	Materials	5,770
5/31	Labor	3,430
5/31	Overhead	2,190
5/31	Balance	?

Production records show that there were 500 units in the beginning inventory, 30% complete, 1,460 units started, and 1,520 units transferred out. The beginning work in process had materials cost of $2,860 and conversion costs of $1,660. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.

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(a), (b) and (c)

(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

Question 2

Duggan Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $304,320 for the year, and machine usage is estimated at 126,800 hours. For the year, $320,387 of overhead costs are incurred and 131,500 hours are used.

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(a)

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

Manufacturing overhead rate		$	per machine hour

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(b)

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(c)

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Question 3

Wilkins Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide 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	$47,900	$102,000
Machine hours	1,410	1,330
Setup hours	110	410

Total estimated overhead costs are $300,900. Overhead cost allocated to the machining activity cost pool is $199,300, and $101,600 is allocated to the machine setup activity cost pool.

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(a)

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

Predetermined overhead rate			% of direct labor cost

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(b)

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(c)

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