Rocky Mountain Outfitters manufactures cowboy boots. Information related to a recent production period is as follows:
Estimated manufacturing overhead, 2004 $240,000
Estimated machine hours, 2004 12,000
Direct labor cost, September $ 8,000
Direct materials cost, September $5,000
Supervisors salary, September $3,000
Factory rent, September $1,800
Factory utilities, September $800
Indirect materials cost, September $2,000
Machine hours worked, September 400
During September, 500 pairs of boots were produced.
a. Using actual costing, what is the unit cost of one pair of boots produced during September?
b. Using normal costing, with machine hours as the activity base, what is the unit cost of one pair of boots produced during sept?
c. If normal costing is used was manufacturing overhead over- or underapplied during September.? by how much?
d. What might have caused the amount of overhead applied to be different from the actual amount?
e. Why would managers at rocky mountain choose to use normal costing rather than actual costing.
1 answer