1. Ace Pizzeria, a manufacturer of frozen pizzas, computes its predetermined overhead rate annually based on machine hours. At the beginning of the year, the company estimated that 165,000 machine hours would be required for the year's estimated level of production. The company also estimated $497,000 in manufacturing overhead expenses. At the end of the year, the company actually used 170,000 machine hours and incurred $500,000 of manufacturing overhead expenses. What predetermined overhead rate did Ace Pizzeria's use to apply overhead? Round to the nearest penny if needed. (Please explain step by step process).

2. Hersch Company has a predetermined overhead rate of $7.00 based on direct labor hours. Last year, 85,000 direct labor hours were used, and actual manufacturing overhead expenses totaled $587,000. Was overhead underapplied or overapplied and by hour much? (Please explain step by step process).

3. Last year, Carnegie Manufacturing produced 85,000 units and sold 82,500 units. The following information pertains to last year's operations: Using absorption costing, what is the product cost per unit? (Please explain step by step process).

Variable Costs Per Unit
	Manufacturing
	Direct Materials	$2.75
	Direct Labor	$1.42
	Variable Overhead	$1.11
	Variable Selling & Administrative	$0.39
Fixed Costs Per Year
	Fixed Manufacturing Overhead	$67,905
	Fixed Selling & Administrative	$104,221