1. You are a manufacturer who produces products in batches. You currently assign overhead to products based on the machine hours (mh). Once of the costs included is setup cost. Machines must be setup for each batch. For the past year, total setup costs were $100,000 for two products.

# Units 4000 (product A), 6000 (product B) Mh/Unit 1 (product A), 4 (product B) # batches 10 (product A), 40 (product B)

a) Calculate the setup cost in total and per unit for each product under current system. b) what is the cost allocation base? c) You have just finished a cost accounting course and have decided to switch activity based costing system. Recalculate setup cost in total and per unit for each product using # of batches as the cost allocation base. d) Which of the two methods more accurately assigns setup costs to the two products?

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2. You use a normal job order cost system, in which manufacturing overhead (moh) is assigned to products using a single monthly-predetermined moh rate based on direct labor cost. For the month of March, the budgeted moh rate is 300% of direct labor cost. Budgeted direct labor cost was $30,000. Beginning inventory was: Beginning Work in process $40,000 (related solely to job #11) Beginning finished goods $104,000 (related solely to job #10)

During the month, Job #10 was sold. Job #11 was finished, but not sold. No new jobs were put into production. Costs incurred in finished job 11 were: $80,000 for direct materials and $44,000 for direct labor. Actual moh incurred in finished job #11 was $110,000.

a) calculate budgeted moh for the month b) Calculate the estimated cost assigned to job #11 in March and total cost of job #11. c) Calculate the ending balance in the work in process and finished goods inventory accounts. d) calculate the cost of goods manufactured and the cost of goods sold for March.