Exercise 16-3

The ledger of Custer Company has the following work in process account.

Work in ProcessPainting

5/1

Balance

4,260

5/31

Transferred out

?

5/31

Materials

6,830

5/31

Labor

4,460

5/31

Overhead

2,010

5/31

Balance

?

Production records show that there were 590 units in the beginning inventory, 30% complete, 1,550 units started, and 1,600 units transferred out. The beginning work in process had materials cost of $2,610 and conversion costs of $1,650. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.

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(a), (b) and (c)

(a) How many units are in process at May 31?

Work in process, May 31

units

(b) What is the unit materials cost for May? (Round unit costs to 2 decimal places, e.g. 2.25.)

The unit materials cost for May

$

(c) What is the unit conversion cost for May? (Round unit costs to 2 decimal places, e.g. 2.25.)

The unit conversion cost for May

$

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Exercise 17-1

Wilkins 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 companys operations.

Standard

Custom

Direct labor costs

$48,400

$99,600

Machine hours

1,200

1,160

Setup hours

100

450

Total estimated overhead costs are $307,200. Overhead cost allocated to the machining activity cost pool is $198,400, and $108,800 is allocated to the machine setup activity cost pool.

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(a)

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

Predetermined overhead rate

% of direct labor cost

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