M17-15. Developing and Using a Predetermined Overhead Rate
Assume that the following predictions were made for 2012 for one of the plants of Milliken & Company:
– Total manufacturing overhead for the year $40,000,000
– Total machine hours for the year 2,000,000

Actual results for February 2012 were as follows:
– Manufacturing overhead . $5,520,000
– Machine hours . 310,000

a. Determine the 2012 predetermined overhead rate per machine hour
b. Using the predetermined overhead rate per machine hour, determine the manufacturing overhead applied to Work-in-Process during February.
c. As of February 1, actual overhead was underapplied by $400,000. Determine the cumulative amount of any overapplied or underapplied overhead at the end of February.

E17.21. Analyzing Activity in Inventory Accounts
Select data concerning operations of Cascade Manufacturing Company for the past fiscal year follow:
Raw materials used .. $300,000
Total manufacturing costs charged to production during the year (includes raw materials, direct labor, and manufacturing overhead applied at a rate of 60 percent of direct labor costs 680,000
Cost of goods available for sale 826,000
Selling and general expenses .. 30,000
Beginning Ending
Raw materials $70,000 $80,000
Work in process $85,000 30,000
Finished goods . $90,000 110,000
Determine each of the following:
a. Cost of raw materials purchased
b. Direct labor costs charged to production
c. Cost of goods manufactured
d. Cost of goods sold