Question 1 SHOW WORK and computations

Landis Company uses a job order cost system in each of its two manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department A and machine hours in Department B. In establishing the predetermined overhead rates for 2021, the following estimates were made for the year:

Department

AB

Manufacturing overhead$2,100,000$1,400,000

Direct labor cost1,500,0001,200,000

Direct labor hours100,000100,000

Machine hours200,000400,000

During January, the job cost sheet showed the following costs and production data:

Department

AB

Direct materials used$195,000$128,000

Direct labor cost100,000110,000

Manufacturing overhead incurred130,000135,000

Direct labor hours8,0008,400

Machine hours16,00034,000

Instructions

(a)Compute the predetermined overhead rate for each department.

(b)Compute the total manufacturing cost assigned to jobs in January in each department.

(c)Compute the balance in the Manufacturing Overhead account at the end of January and indicate whether overhead is over- or underapplied.

Question 2 SHOW WORK and computations

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

WORK IN PROCESSFINISHING

6/1Balance8,0006/30Transferred out?

6/30Materials1,800

6/30Labor3,800

6/30Overhead2,800

6/30Balance?

Production records show that there were 2,000 units in beginning inventory, 50% complete; 8,000 units started, and 4,500 units transferred out. The beginning work in process had conversion costs of $3,150. The units in ending inventory were 60% complete. Materials are added at the beginning of the process.

Instructions

Answer the following questions.

(a)How many units are in process at June 30?

(b)What is the unit conversion cost for June?

(c)What is the conversion cost in the June 30 inventory?

Question 3 SHOW WORK and computations

Hayward Industries manufactures dining chairs and tables. The following information is available:

Dining ChairsTablesTotal Cost

Machine setups200600$48,000

Inspections250470$72,000

Labor hours2,6002,400

Hayward is considering switching from one overhead rate based on labor hours to activity-based costing.

Instructions

Perform the following analyses for these two components of overhead:

a.Compute total machine setups and inspection costs assigned to each product, using a single overhead rate (labor hours).

b.Compute total machine setups and inspection costs assigned to each product, using activity-based costing.

c.Comment on your findings.