Deckhand Accessories, Inc., manufactures women’s boating shoes. Manufacturing overhead is assigned to production on a machine-hour basis. For 2010, it was estimated that manufacturing overhead would total $974,400 and that 67,200 machine hours would be used.
Required:
a. Calculate the predetermined overhead application rate that will be used for absorption costing purposes during 2010.
b. During May, 11,720 pairs of shoes were made. Raw materials costing $56,936 were used, and direct labor costs totaled $57,600. A total of 5,680 machine hours were worked during the month of May. Calculate the cost per pair of shoes made during May.
c. At the end of May, 3,156 pairs of shoes were in ending inventory. Calculate the cost of the ending inventory and the cost of the shoes sold during May.