Of the $104,000 manufacturing overhead, 30 percent was unit level and 70 percent was facility level.

This year Leevies expects to operate at the same activity level as last year, and overhead costs and the wage rate are not expected to change. For the first quarter of this year, Leevies had just completed two jobs and was beginning the third. The costs incurred follow:

Jobs Material Production Labor Overhead BH eeniaie caroo ee aa eR Ce eee $13,720 $49,000 $13,390 BA esle nr tvermes elt. eck rotten gis. de menshatels 9,300 31,240 S70 CSRS) Wet anthems oc dec Bane SE cee Ne pce 9,400 19,760 2,160 Total factory Overhead. .............cteneeen 27,120 Total selling and administrative costs 10,900 In the first quarter of this year, 40 percent of selling and administrative costs were job level and 60 percent were facility level. Leevies has told you that jobs 81 and 82 were sold for $89,500 and $62,500, respectively. All over- or underapplied overhead for the quarter is expected to be expensed on the income statement.

Required

a. Begin your analysis by presenting in T-accounts the absorption, actual manufacturing cost flows for the three jobs in the first quarter of this year.

b. Using last year’s costs and direct-labor hours as this year’s estimate, calculate predetermined costdriver rates for unit-level overhead as a percentage of direct-material cost and facility-level overhead as a percentage of direct-labor cost.

c. Present in T-accounts the absorption, normal manufacturing cost flows for the three jobs in the first quarter of this year. Use the cost-driver rates derived in requirement (b).

d. Prepare income statements for the first quarter of this year under the following costing systems:

1. Absorption, actual.

2. Absorption, normal.

e. Prepare a short presentation to demonstrate and explain whether the choice of method in requirement

(d) makes a difference.