Problem 4 (12 points)Kurth Corporation uses a job-order cost…

Problem 4 (12 points)Kurth Corporation uses a job-order cost system to trace costs to its custom made jewelry products that are specially tailored to meet specific customer needs.  Kurth has little trouble tracing direct materials costs and direct labor costs to the jobs it undertakes.  However, manufacturing overhead has posed a bit more of a challenge due to its indirect nature.  Kurth is considering two different activities upon which to base its predetermined overhead rate.  The following information is computer output from two least squares regression analyses that were run using past data from the company.    Direct Labor Hours (DLH) Machine Hours (MH) Estimated fixed overhead $50,000 $70,000 Estimated variable overhead per unit of production $7 per DLH $5 per MH R-squared from least squares regression O.88 0.57 For 2013, Kurth had expected direct labor hours equal to 10,000 hours and expected machine hours equal to 20,000.  Kurth had actual direct labor hours for 2013 of 12,000 and actual machine hours of 18,000.  Actual manufacturing overhead costs for 2013 were $148,500. Required:     a.  Compute the predetermined overhead rate using DLH as the activity base. b. How much is the under-applied or over-applied manufacturing overhead before allocation to cost of goods sold using your answer from part a? c. Compute the predetermined overhead rate using MH as the activity base.  d. How much is the under-applied or over-applied manufacturing overhead before allocation to COGS using your answer from part c? e.  After all under- or over-applied manufacturing overhead is allocated to cost of goods sold at the end of the period, which allocation base (DLH or MH) will give you a higher cost of goods sold for the period? Please circle one of the following:           i.      DLH          ii.      MH         iii.      Both will have the same cost of goods sold  f.  Which allocation base (DLH or MH) would you decide to use at the beginning of 2013?  Why?  
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Problem 1 (8 points)   Bill Pope has developed a new device…

Problem 1 (8 points)   Bill Pope has developed a new device that is so exciting he is considering quitting his job in order to produce and market it on a large-scale basis. Bill will rent a garage for $300 per month for production purposes. Utilities will cost $40 per month. Bill has already taken an industrial design course at the local community college to help prepare for this venture. The course cost $300. Bill will rent production equipment at a monthly cost of $800. He estimates the material cost per unit will be $5, and the labor cost will be $3. He will hire workers and spend his time promoting the product. To do this he will quit his job which pays $3,000 per month. Advertising and promotion will cost $900 per month. Required: Complete the chart below by placing an “X” under each heading that helps to identify the cost involved. There can be “Xs” placed under more than one heading for a single cost, e.g., a cost might be a sunk cost, an overhead cost and a product cost; there would be an “X” placed under each of these headings opposite the cost.       Opportunity Cost Sunk Cost Variable Cost Fixed Cost Manufacturing Overhead Cost Product Cost Selling Cost Differential Cost * Garage Rent                 Utilities                 Cost of the industrial design course                 Equipment rented                 Material cost                 Labor Cost                 Present salary                 Advertising                  
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