San Diego Fashions. Inc. (SDF), a local company that uses a job-order normal costing system, had two jobs in process at the start of 2023: job no. 101 ($168,000) and job no. 102 ($107,000). The following information is available:

a). The company applies manufacturing overhead on the basis of machine hours. SDF has budgeted 31,800 machine hours to be used consistently in 2023. Data concerning machine hours and manufacturing overhead incurred during 2022 follow.

Month	Machine hours	MOH
January	3,800	$138,700
February	3,600	137,300
March	2,300	103,250
April	2,050	100,800
May	2,200	110,100
June	2,400	110,550
July	2,000	110,000
August	2,800	120,400
September	2,600	120,120
October	2,100	100,200
November	2,200	112,350
December	2,400	115,350

b). The company started/worked on four jobs during the first quarter of 2023. Direct materials used, direct labor incurred, and machine hours consumed were as follows:

Job No.	Direct Material	Direct Labor	Machine Hours
101	$42,000	$70,000	?
102	-	44,000	2,400
103	88,000	130,000	3,000
104	30,000	17,600	2,000

c). Manufacturing overhead during the first quarter included charges for depreciation ($68,000), indirect labor($120,000), indirect materials used ($10,000), and other factory costs ($279,000).

d). San Diego Fashions completed job no. 101 and job no. 102. Job no. 101 was sold for $425,400 on account, reporting a gross margin of $19,400 for the firm.

Required (show your work to receive partial credit):

1. Based on SDFs 2022 MOH cost data, what is your estimated monthly fixed MOH cost and variable MOH cost per machine hours respectively? What cost behavior did the SDFs 2022 MOH cost demonstrate?

2. What is your estimate of SDFs 2023 budgeted MOH based on 2022 incurred MOH data? Discuss two limitations of your estimate.

3. Determine the cost of jobs still in production reported on the March 31 general ledger.

4. Assume SDFsbudgeted MOH was $1,406,000, how much was the manufacturing overhead under or overapplied for the first quarter of 2023? What would you recommend SDF to account for the amount? Why? How would it affect your profitability analysis of the Job No. 101?

5. Should SDF use its 2023 budgeted MOH cost or its 2022 incurred MOH cost as a

benchmark to evaluate its managers performance in controlling 2023 MOH cost variance? Why?

6. Can you recommend a better benchmark for MOH variance analysis and control? Explain a pro of your recommended benchmark.