Question

The Brookstone Company produces 9 volt batteries and AAA batteries. The Brookstone Company uses a plantwide rate to apply overhead based on direct labor hours. The following data is given:

Actual Overhead	$325,000
Estimated Overhead	$350,000
Estimated Activity:
9 volt battery	100,000 direct labor hours
AAA battery	400,000 direct labor hours
Actual Activity:
9 volt battery	125,000 direct labor hours
AAA battery	400,000 direct labor hours
Units Produced:
9 volt battery	500,000
AAA battery	250,000

What is the predetermined overhead rate? (round to 2 decimal places)

a.$0.65

b.$0.70

c.$0.67

d.$0.62

The following information is available for Department C for the month of June:

	Units	Cost
Work in process, June 1 (70% complete)	10,000
Direct materials		$ 36,000
Direct labor		18,000
Manufacturing overhead		24,000
Total work in process, June 1		$78,000
Started in production during June	40,000
Costs added:
Direct materials		$108,000
Direct labor		48,000
Manufacturing overhead		60,600
Total costs added during June		$216,600
Work in process, June 30 (80% complete)	4,000

Materials are added at the beginning of the process. Round unit costs to two decimal places.

The cost of ending work in process using the weighted average method is

a. $23,760.

b.$16,992.

c.$21,312.

d.None of these choices are correct

Answer 1

Question 1

Correct answer-----------b.$0.70

Working

(A)	Estimated Manufacturing Overheads	$ 350,000
(B)	Estimated Direct labor hours (400000+100000)	500,000
C= (A/B)	Predetermined Overhead rate	0.70 per direct labor hour

Question 2

Correct answer-----------c.$21,312.

Working

Reconciliation of Units
A	Beginning WIP	10,000
B	Introduced	40,000
C=A+B	TOTAL	50,000
D	Transferred out	46,000
E=C-D	Ending WIP	4,000

.

Statement of Equivalent Units(Weighted average)
				Material		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	46,000			100%	46,000	100%	46,000
Ending WIP	4,000			100%	4,000	80%	3,200
Total	50,000			Total	50,000	Total	49,200

.

Cost per Equivalent Units (Weighted average)
COST		Material	Conversion cost	TOTAL
Beginning WIP Inventory Cost		$ 36,000	$ 42,000	$ 78,000
Cost incurred during period		$ 108,000	$ 108,600	$ 216,600
Total Cost to be accounted for		$ 144,000	$ 150,600	$ 294,600
Total Equivalent Units		50,000	49,200
Cost per Equivalent Units		$                   2.88	$                     3.06	$                5.94

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$ 2.88	4,000	$          11,520.00	46,000	$        132,480.00
Conversion cost	$ 3.06	3,200	$             9,792.00	46,000	$        140,760.00
TOTAL	$ 294,552	TOTAL	$ 21,312	TOTAL	$ 273,240