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1.The following information was gathered for Wellington Company:

Budgeted direct-labor hours 75,000
Actual direct-labor hours 77,500
Budgeted factory overhead $525,000
Actual factory overhead $538,000

Assume that direct-labor hours is the cost driver.

Compute:
a.Budgeted factory-overhead rate

b.Factory overhead applied

c.Amount of over/underapplied overhead

2.Pappa Don's makes frozen pizzas. All direct materials are introduced at the start of the process. Conversion costs are incurred evenly throughout the process. In February there was no beginning WIP inventory, but 485,000 units were started. At the end of February, there were 90,000 units still in process at the 70% stage of completion. Total costs incurred during February amounted to $1,212,500 for materials and $3,664,000 for conversion costs.

Compute the following:
a.Units completed and transferred

b.Equivalent units of materials and conversions

c.Cost per equivalent unit of materials and conversion

d.Cost of a completed unit

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Solution Summary

This is a set of accounting problems that shows how to calculate cost per unit of materials and conversion, cost of a completed unit, and factory overhead.

Solution Preview

1)
a) The budgeted factory - overhead rate = budgeted factory overhead / budgeted direct-labor hour
= $525,000 / 75,000
...

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