Sr # Question Q.1 Cretin Enterprises uses a predetermined overhead rate of $21.40 per direct labor- hour. This predetermined rate was based on a cost formula that estimated $171,200 of total manufacturing overhead for an estimated activity level of 8,000 direct labor- hours. The company incurred actual total manufacturing overhead costs of $172,500 and 8,250 total direct labor-hours during the period. Required: 1. Determine the amount of underapplied or overapplied manufacturing overhead for the period. 2. Assuming that the entire amount of the underapplied or overapplied overhead is closed out to cost of goods sold, what would be the effect of the underapplied or overapplied overhead on the company's gross margin for the period? Q.2 Kalox, Inc., manufactures an antacid product that passes through two departments. Data for May for the first department follow: Gallons Materials Work in process, May 1...... 80,000 $68,600 Gallons started in process.... 760,000 Gallons transferred out.... Work in process, May 31. Cost added during May..... 790,000 50,000 Labor Overhead $30,000 $48,000 $907,200 $370,000 $592,000 The beginning work in process inventory was 80% complete with respect to materials and 75% complete with respect to labor and overhead. The ending work in process inventory was 60% complete with respect to materials and 20% complete with respect to labor and overhead. Required: Assume that the company uses the weighted-average method of accounting for units and costs. 1. Compute the equivalent units for May's activity for the first department. 2. Determine the costs per equivalent unit for May. M