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Bobbys Adventure

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Submitted By bobby3929
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Garrison 14e Practice Exam – Chapter 3

Print these pages. Answer each of the following questions, explaining your answers or showing your work, and then compare your solutions to those provided at the end of the practice exam.

1. Reformer Company estimates that 64,000 direct labor hours will be worked and 80,000 machine hours will be incurred during the year. In addition, the company has developed the following cost estimates for next year:

|Sales commissions |$600,000 |
|Direct labor |440,000 |
|Salary of production supervisor |280,000 |
|Rent on factory equipment |128,000 |
|Direct materials |120,000 |
|Advertising expense | 88,000 |
|Indirect materials |40,000 |

If overhead is applied on the basis of direct labor hours, what is the company’s predetermined overhead rate?

2. Sunstead Company uses a job-order costing system and applies manufacturing overhead to Work in Process inventory using a predetermined overhead rate. The company had no beginning or ending inventories in the current month. During the month, the company’s transactions included the following:

|Manufacturing overhead cost incurred |$1,000,000 |
|Manufacturing overhead cost applied |904,000 |
|Direct labor cost incurred |856,000 |
|Direct materials issued to production |720,000 |
|Indirect materials issued to production |64,000 |

Part (a) What was the cost…...

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