manufacturing overhead to jobs. Last year, the company’s estimated manufacturing overhead

was $1,500,000 and its estimated level of activity was 50,000 direct labor-hours. The

company’s direct labor wage rate is $12 per hour. Actual manufacturing overhead amounted

to $1,450,000, with actual direct labor cost of $630,000. For the year, manufacturing

overhead was:

A) overapplied by $125,000

B) underapplied by $125,000

C) overapplied by $50,000

D) underapplied by $50,000

2. Daane Company had only one job in process on May 1. The job had been charged with

$1,000 of direct materials, $3,000 of direct labor, and $5,000 of manufacturing overhead

cost. The company assigns overhead cost to jobs using the predetermined overhead rate of

150% of direct labor costs.

During May, the following activity was recorded:

Raw materials (all direct materials):

Beginning balance $8,000

Purchased during the month $20,000

Used in production $25,000

Direct labor costs $18,000

Actual manufacturing overhead costs incurred $30,000

Inventories:

Raw materials, May 30 $3,000

Work in process, May 30 $15,250

The cost of goods manufactured for May was:

A) $63,750

B) $66,750

C) $77,150

D) $74,822

3. During September, Stutzman Corporation incurred $90,000 of actual Manufacturing

Overhead costs. During the same period, the Manufacturing Overhead applied to Work in

Process was $80,000.

The journal entry to record the application of Manufacturing Overhead to Work in Process

would include a:

A) credit to Manufacturing Overhead of $80,000

B) credit to Work in Process of $90,000

C) debit to Manufacturing Overhead of $80,000

D) debit to Work in Process of $90,000

Use the following to answer questions 4, 5 and 6:

Accola Company uses activity-based costing. The company has two products: A and B. The

annual production and sales of Product A is 1,000 units and of Product B is 800 units. There are

three activity cost pools, with estimated costs and expected activity as follows:

Estimated Expect Activity

Activities Overhead cost Product A Product B

Activity 1 $35,000 2,900 4,100

Activity 2 $4,000 450 1,550

Activity 3 $240,000 19,000 21,000

4. The activity rate for Activity 2 is:

A) $2.00

B) $8.88

C) $2.58

D) $2.22

5. The overhead cost per unit of Product A is:

A) $159.22

B) $157.20

C) $129.40

D) $187.00

6. The overhead cost per unit of Product B is:

A) $159.22

B) $157.20

C) $129.40

D) $187.00

Use the following to answer questions 7 and 8:

The following data were taken from the accounting records of the Hazel Corporation which uses

the weighted-average method in its process costing system:

Beginning work in process inventory (materials 90%

complete; conversion 60% complete) 40,000 units

Started in process during the period 80,000 units

Ending work in process inventory (materials 100%

complete; conversion 70% complete) 30,000 units

7. The equivalent units for material costs was:

A) 90,000 units

B) 120,000 units

C) 111,000 units

D) 87,000 units

8. The equivalent units for conversion costs was:

A) 90,000 units

B) 120,000 units

C) 111,000 units

D) 87,000 units