Redmar Inc manufactures custom campers They use a costing sy

Redmar, Inc. manufactures custom campers. They use a costing system with one rate of manufacturing overhead. In this system, they apply manufacturing overhead based on the direct labor hours. Below are the estimated costs (both period and product), estimated number of campers to be produced this year, and estimated direct labor hours per camper for the year-ended 2018 Cost Indirect Production Labor Factory Insurance Factory Utilities Marketing expense Production Supervisor Salaries of salespeople Direct Labor Depreciation on sales office Direct materials Factory Rent Depreciation of factory Amount 75,000 $ 15,400 $ 30,800 $57,700 $ 62,300 $122,500 $ 262,000 25,000 $225,000 $69,800 $124,300 Estimated campers to be manufactured in 2018 400 Estimated direct labor hours per camper 25

Solution

A) manufacturing overhead = 75000+15400+30800+62300+69800+124300=377600 Total DLHs = estimated campers * DLHs per camper = 400 * 25 = 10000 Predetermined overhead rate = Manufacturing overhead / Total DLHS = 377600/10000 = $37.76 B) WIP ACCOUNT: DM 190000 DL 12110*20= 242200 M OH applied 12110*37.76=457274 Tota Cost 889474 Actual camper produced = 500 Actual cost per camper = 889474/500 = 1779 per camper C) Manufacturing overhead under applied = 460000 - 457274 = 2726 D) COGS = (460 * 1779) + 2726 = 819686 Net Income = Sales - COGS - Adm & Sell costs = (460 * 3000) - 819686 - 75000 = 485314 E) Inventory : Raw Materials = 250000 - 190000 - 30000 = 30000 WIP = 20 * 1779 = 35580 FG = 20 * 1779 = 35580