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1) Duggan Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total \$290,030 for the year, and machine usage is estimated at 126,100 hours.
For the year, \$308,864 of overhead costs are incurred and 132,300 hours are used.

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

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

Work in Process—Painting
5/1 Balance 4,200 5/31 Transferred out ?
5/31 Materials 6,570
5/31 Labor 3,500
5/31 Balance ?

Production records show that there were 420 units in the beginning inventory, 30% complete, 1,590 units started, and 1,400 units transferred out. The beginning work in process had materials cost of \$2,500 and conversion costs of \$1,700. 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?

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

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

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 \$51,100 \$103,000
Machine hours 1,400 1,200
Setup hours 110 420

Total estimated overhead costs are \$303,900. Overhead cost allocated to the machining activity cost pool is \$196,100, and \$107,800 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

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