Reference no: EM133013256

Question - Clay Co. produces ceramic coffee mugs and pencil holders. Manufacturing overhead is assigned to production using an application rate based on direct labor hours.

A) For 2019, the company's cost accountant estimated that the total overhead costs incurred would be $ 693,600 and that a total of 68,000 direct labor hours would be worked. Calculate the amount of overhead to be applied to each direct labor hour worked on a production run. Please round your answer to 2 decimal places.

B) A production run of 500 coffee mugs used raw materials that cost $ 600 and used 60 direct labor hours at a cost of $11.80 per hour. Calculate the cost of each coffee mug produced.

C) At the end of October 2019, 410 coffee mugs made in the production run in part B had been sold and the rest were in ending inventory.

Required -

a) Calculate the cost of the coffee mugs sold that would have been reported in the income statement and

b) Calculate the cost included in the October 31, 2019 finished goods inventory. Please round your answers to 2 decimal places.