Accounting: What the Numbers Mean 11th Edition by Wayne McManus,Daniel Viele,David Marshall

Exercise 19

Product costing-manufacturing overhead Nautical Accessories, Inc., manufactures women's boating hats. Manufacturing overhead is assigned to production on a machine-hour basis. For 2016, it was estimated that manufacturing overhead would total $359,520 and that 21,400 machine hours would be used.
Required:
a. Calculate the predetermined overhead application rate that will be used for absorption costing purposes during 2016.
b. During April, 3,900 hats were made. Raw materials costing $6,240 were used, and direct labor costs totaled $9,165. A total of 780 machine hours were worked during the month of April. Calculate the cost per hat made during April.
c. At the end of April, 1,050 hats were in ending inventory. Calculate the cost of the ending inventory and the cost of the hats sold during April.