Reference no: EM131794668

Assignment

Exercise 1: (Part Level Submission) Saddle 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	$41,000	$99,000
Machine hours	1,430	1,330
Setup hours	110	420

Total estimated overhead costs are $304,000. Overhead cost allocated to the machining activity cost pool is $197,000, and $107,000 is allocated to the machine setup activity cost pool.

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

Exercise 2: (Part Level Submission)

Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $276,980 for the year, and machine usage is estimated at 125,900 hours.

For the year, $351,020 of overhead costs are incurred and 132,600 hours are used.

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

Exercise 3: (Part Level Submission) The ledger of American Company has the following work in process account.

Work in Process-Painting
5/1	Balance	3,890	5/31	Transferred out	?
5/31	Materials	5,840
5/31	Labor	2,630
5/31	Overhead	1,780
5/31	Balance	?

Production records show that there were 530 units in the beginning inventory, 30% complete, 1,760 units started, and 1,540 units transferred out. The beginning work in process had materials cost of $2,440 and conversion costs of $1,450. 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?