the plant manager of the manufacturing division of Waterways Corporation, has been focusing on changes to overhead costs. He realizes that Ben Clarks new designs call for more automation in the plant, but he is also investigating if there are any opportunities for cost savings. Ryan thought it might be helpful to his cost-cutting measures if he could predict what manufacturing overhead would be in the following months. But first he needed to determine the appropriate activity base. He thought there could be two possibilities: direct labour or the number of hours of operation. From historical data, he retrieved the following information:

		Direct Labour		Hours of Operation		Manufacturing Overhead
January		$24,500		400		$131,500
February		23,500		420		147,950
March		29,500		600		156,500
April		31,500		590		177,550
May		26,500		475		150,550
June		24,500		450		140,150

Ryan then asked CFO Jordan Leigh for information available to determine the cost of goods manufactured. Ryan was provided with the following information.

1.		The balances in the applicable inventory accounts at the beginning of the month were: Raw materials inventory $37,000; Work in process inventory $63,000.
2.		Raw material purchases for the month were $192,000.
3.		Of the raw materials used in production, 70% could be traced to the actual production, and the rest was indirect materials.
4.		Ending raw materials inventory was $44,000.
5.		Actual costs for wages and salaries were $70,000, of which 50% was considered overhead; the balance was direct labour.
6.		Hours of operation for the month were 560.
7.		Total manufacturing costs for the month were $300,000.
8.		Costs transferred into finished goods inventory for the month were $310,000.

Using the high-low method, and based on the historical data provided, determine two possible cost formulas for manufacturing overhead. (Round answers to 2 decimal places, e.g. 2.75 wherever necessary.)

		Cost Formula
Based on direct labour		$enter a dollar amount	+	enter a dollar amount rounded to 2 decimal places X
Based on hours of operation		$enter a dollar amount	+	$enter a dollar amount X

Using the cost formulas developed in the previous part, determine the manufacturing overhead and actual manufacturing overhead for the month.

		Manufacturing overhead
Based on direct labour		$enter a dollar amount
Based on hours of operation		$enter a dollar amount
Actual		$enter a dollar amount

Determine which activity base would be better for predicting manufacturing overhead.

select an option Direct labourHours of operation would be better choice as an activity base for predicting manufacturing overhead.

Prepare a condensed cost of goods manufactured schedule.

Waterways Corporation Schedule of Cost of Goods Manufactured
select an opening name for this schedule Cost of Goods ManufacturedDirect LabourDirect MaterialsRaw Materials PurchasesManufacturing OverheadRaw Materials Inventory, BeginningRaw Materials Inventory, EndingTotal Cost of Work in ProcessTotal Manufacturing CostsTotal Manufacturing OverheadTotal Raw Materials Available for UseWork in Process, BeginningWork in Process, EndingFinished Goods Inventory, BeginningFinished Goods Inventory, EndingRaw Materials Used in ProductionIndirect Materials						$enter a dollar amount
select an opening section name Cost of Goods ManufacturedDirect LabourDirect MaterialsRaw Materials PurchasesManufacturing OverheadRaw Materials Inventory, BeginningRaw Materials Inventory, EndingTotal Cost of Work in ProcessTotal Manufacturing CostsTotal Manufacturing OverheadTotal Raw Materials Available for UseWork in Process, BeginningWork in Process, EndingFinished Goods Inventory, BeginningFinished Goods Inventory, EndingRaw Materials Used in ProductionIndirect Materials