Champs, Inc., manufactures women\'s boating shoes. Manufacturing overhead is ass

Question

Champs, 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 $354,570 and that 24,560 machine hours would be used.

Calculate the predetermined overhead application rate that will be used for absorption costing purposes during 2010

(b) During May, 3,200 pairs of shoes were made. Raw materials costing $6,870 were used, and direct labor costs totaled $9,020. A total of 760 machine hours were worked during the month of May. Calculate the cost per pair of shoes made during May.

At the end of May, 1,250 pairs of shoes were in ending inventory. Calculate the cost of the ending inventory and the cost of the shoes sold during May.

Champs, 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 $354,570 and that 24,560 machine hours would be used.

Explanation / Answer

(a)   Calculate the predetermined overhead application rate that will be used for absorption costing purposes during 2010 predetermined overhead application rate = 354570/24560 = $14.4369 per M.hr (b)   During May, 3,200 pairs of shoes were made. Raw materials costing $6,870 were used, and direct labor costs totaled $9,020. A total of 760 machine hours were worked during the month of May. Calculate the cost per pair of shoes made during May. cost per pair = 26862/3200 = $8.3944 (c)    At the end of May, 1,250 pairs of shoes were in ending inventory. Calculate the cost of the ending inventory and the cost of the shoes sold during May. Cost of Ending Inventory = 1250*8.3944 = $10493.00 Cost of the shoes sold = 1950*8.3944 = $16369.00

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