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1) Duggan Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $302,400 for the year, and machine usage is estimated at 126,000 hours.

For the year, $319,510 of overhead costs are incurred and 131,200 hours are used.

(a) Compute the manufacturing overhead rate for the year. (Round answers to 2 decimal places, e.g. 1.25.)

(b) What is the amount of under- or overapplied overhead at December 31?

(c) Prepare the adjusting entry to assign the under- or overapplied overhead for the year to cost of goods sold.
2) The ledger of Custer Company has the following work in process account.

Work in Process-Painting

5/1 Balance 3,960 5/31Transferred out?

5/31 Materials 5,770

5/31 Labor 4,330

5/31 Overhead 1,710

5/31 Balance ?

Production records show that there were 410 units in the beginning inventory, 30% complete, 1,510 units started, and 1,400 units transferred out. The beginning work in process had materials cost of $2,240 and conversion costs of $1,720. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.

(a) How many units are in process at May 31?

(b) What is the unit materials cost for May?

(c) What is the unit conversion cost for May?

3) Wilkins Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations.

Standard

Custom

Direct labor costs$41,000$100,000

Machine hours1,1001,140

Setup hours95420

Total estimated overhead costs are $305,200. Overhead cost allocated to the machining activity cost pool is $199,700, and $105,500 is allocated to the machine setup activity cost pool.

(a) Compute the overhead rate using the traditional (plantwide) approach.

(b) Compute the overhead rates using the activity-based costing approach.

(c) Determine the difference in allocation between the two approaches.

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