Billowy Materials Company makes various pillow fill for a wide variety of resellers. Because of the semi-custom nature of Billowlys production, Billowly has traditionally used a job costing system in each of its three manufacturing departments. Manufacturing overhead is currently being applied to jobs on the basis of direct labor costs in the fabrication department, direct labor hours in the preparation department, and machine hours in the finishing department. For the current year, the following estimates had been generated by management based on a recent periods results and expectations for changes in market demand.

	Department
	Fabrication	Preparation	Finishing
Manufacturing Overhead	$840,000	$1,500,000	$720,000
Direct labor costs	$1,400,000	$1,250,000	$450,000
Direct labor hours	100,000	125,000	40,000
Machine hours	400,000	500,000	120,000

Please refer to the department and job cost records data file for job-specific cost and pricing information (where appropriate), as well as manufacturing overhead incurred in each department, for the current month (found in the Notes and Dept Information tab). Note that a blank selling price reflects a job that is still in process or remains in inventory, which will also be denoted in the status field.

Using the estimates above and the job cost records data, answer the following:

1. What was the predetermined overhead rate for each department for the year?
2. What were the total manufacturing costs assigned to jobs in each department this month?
3. What was the under- or over-applied overhead for each department at the end of the month? What might this tell you about the full year overhead estimates in each department?
4. What was the total cost of ending work in process inventory & total cost of goods sold?
5. What was the overall gross margin of Billowy for the period?

Some of Billowys upper-level managers believe that Billowys orders have become decreasingly customized in recent periods, and that the products leaving the production facilities are more and more similar. One of Billowys executives believes the company could simplify its costing sytem as a result, and switch to a process costing system encompassing all three of the above-listed departments together.

Assume that none of the units shown in the data set were in process at the start of the period. With this in mind, determine the following:

1. The equivalent units of production for materials and conversion.
2. The unit costs of production for materials and conversion.
3. The assignment of costs to units transferred out (to finished goods) and in process at the end of the period.
4. Please also prepare a cost reconciliation report for this combined process.
5. Do you see any evidence in the job cost data to suggest that the execs claim of more and more standard products has merit? Why or why not?