Question A

Rahul Ltd allocates manufacturing overhead to work in process based on direct labour hours. On 1st January of the current year, there were no balance in work in process of finished goods inventories. The following estimates were included in the budget for the current year:

Total projected manufacturing overhead $300,000

Total projected direct labour hours 40,000

During January, the firm worked on the following production jobs:

Deviya D: 1,600 direct labour hours

Dev B: 2,400 direct labour hours

Vagami P: 1,000 direct labour hours

Actual overhead incurred by Rahul Ltd amounted to $30,000.

Required:

1. Calculate the company's predetermined overhead rate for the year.

2. How much manufacturing overhead was applied to production?

3. Calculate and journalize the overapplied or underapplied overhead.

Question B

Rupa's Mineral Water manufactures bottled water for sale to local department stores. The company uses the Weighted Average Method of process costing to account for the cost of the bottled water it produces. Raw materials (barium, iron, manganese, etc.) are added at the beginning of production. Conversion costs are incurred at a consistent rate during the production process. Data for Rupa's Mineral Water are as follows:

Units Production Costs

Work in process, December 1: 4,000

Raw materials $2,132

Conversion costs (60% complete) $976

Started during December 50,000

Raw materials $40,188

Conversion costs $9,744

Work in process, December 31: 11,000

Raw materials

Conversion costs (60% complete)

Required:

A. How many units were completed in December?

B. How many equivalent units were completed in December for raw materials and conversion costs?

C. What is the cost per equivalent unit for raw materials and conversion costs?

D. What is the cost of ending WIP?

E. What is the cost of goods manufactured during December?