Posted: July 9th, 2016
1. Amanda Bitsworth manufactures votive candles. Overhead is applied to products on the basis of direct labor hours. Last year, total overhead costs were expected to be $85,000. Actual overhead costs totaled $63,000 for 6,500 actual hours. At the end of the year, overhead was under-applied by $4,000.
A) Calculate the predetermined overhead rate. If required, round your answer to the nearest dollar. _____ per direct labor hour.
B) How much overhead should be applied to a job that was completed in three direct labor hours?
2. Kurtis Kabinets produces custom cabinetry for homes, which are sold nationwide. The company adds overhead costs to cabinetry projects at the rate of $7.55 per direct labor hour. The company accumulates overhead costs in a separate manufacturing overhead account and uses normal costing to assign overhead. The following data provide details of the company’s activity and balances during the last half of the year
-Direct Materials Inventory: $60,700
-Work in progress: $43,500
-Finished-goods inventory: $24,100
-Direct Materials Inventory: $60,000
-Work in progress: $43,400
-Finished-goods inventory: $22,800
Production data for period
Direct materials purchased: $154,000
Direct labor costs ($14/hr): $261,700
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