Problem 1: The following calendar year information about the Tahoma Corporation is available on December 31:
Advertising expense $28,800
Depreciation of factory equipment 42,320
Depreciation of office equipment 10,800
Direct labor 142,600
Factory utilities 35,650
Interest expense 6,650
Inventories, January 1:
Raw materials 3,450
Goods in process 17,250
Finished goods 35,650
Inventories, December 31
Raw materials 2,300
Goods in process 20,700
Finished goods 31,050
Raw materials purchases 132,450
Rent on factory building 41,400
Indirect labor 51,750
Sales commissions 16,500
The company applies overhead on the basis of 125% of direct labor costs. Calculate the amount of over- or underapplied overhead.
Factory overhead costs:
Problem 2:
A company uses a process cost accounting system. The following information is available regarding direct labor for the current year:
Goods in process, January 1 5,500 units, 80% complete
Goods in process, December 31 8,800 units, 40% complete
Units completed and transferred
to finished goods 46,900 units
Direct labor costs during the year $266,300
(a) Calculate the equivalent units of production for direct labor for the year.
(b) Calculate the average cost per equivalent unit for direct labor (round to the nearest cent).
Problem 3:
A retail store has three departments, A, B, and C, each of which has four full-time employees. The store does general advertising that benefits all departments. Advertising expense totaled $90,000 for the current year, and departmental sales were:
Department A $356,250
Department B 641,250
Department C 427,500
How much advertising expense should be allocated to each department?