1. Pinnini Co. uses a predetermined overhead rate based directly on working hours to apply the overhead production load to jobs. Last year, Pinnini Company incurred $300,000 in actual overall production cost. The Production Overhead account showed that the overhead was applied under $15,000 for the year. If the predetermined overhead rate is $5.00 per direct labor hour, how many direct hours did the company work during the year?

2. Cosgrove Company manufactures two products, Product K-7 and Product L-15. The company's selling price for each product is based on the production costs of each product. Specifically, the selling price formula is as follows: Cost + 150% of cost

Product L-15 has a fairly recent origin, developed as an attempt to enter a market closely related to Product K-7. Product L-15 is the more complex of the two products and requires 2 hours of direct labor per unit to manufacture, compared to 1 hour of direct labor time for Product K-7.

Currently, factory overhead is applied to products using a factory-wide rate based on direct hours of operation. The company estimated that it would incur production overhead costs of $550,800 and 60,000 direct labor hours to produce 40,000 units of Product K-7 and 10,000 units of Product L-15 in the current year. Material and labor unit costs are as follows:

                                  Product K-7         Product L-15

Direct material            $12                           $25

Direct labor                  $8                            $16

Calculate the per-unit cost of production of Product K-7 under the current factory-wide overhead allocation.

Calculation of the production cost per unit of Product L-15 within the scope of the current facility-wide overhead allocation

Answer rating: 100% (QA)

To determine the number of direct labor hours worked during the year we can use the formula Actual O... View the full answer