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Goe Co. makes specialty table lamps. Manufacturing overhead is applied to production on a direct labor hours basis. During November, the first month of the company’s fiscal year, $59,190 of manufacturing overhead was applied to Work in Process Inventory using the predetermined overhead application rate of $6.18 per direct labor hour.
a. Calculate the number of hours of direct labor used during November
Actual manufacturing overhead costs incurred during November totaled $48,530. b. Calculate the amount of over- or underapplied overhead for November.
Identify two possible explanations for the over- or underapplied overhead.
Actual costs were less than anticipated.
More hours were worked.
Additional variable costs.
Additional fixed costs.
Allocated costs less than anticipated.

Rolen, Inc., is in the process of preparing the fourth quarter budget for 2010, and the following data have been assembled:
•The company sells a single product at a price of $55 per unit. The estimated sales volume for the next six months is as follows:
September 15,600 units
October 14,400 units
November 16,800 units
December 24,000 units
January 10,800 units
February 12,000 units
All sales are on account. The company’s collection experience has been that 30% of a month’s sales are collected in the month of sale, 68% are collected in the month following the sale, and 2% are uncollectible. It is expected that the net realizable value of accounts receivable (i.e., accounts receivable less allowance for uncollectible accounts) will be $583,440 on September 30, 2010.
•Management’s policy is to maintain ending finished goods inventory each month at a level equal to 30% of the next month’s budgeted sales. The finished goods inventory on September 30, 2010, is expected to be 4,320 units.
•To make one unit of finished product, 4 pounds of materials are required. Management’s policy is to have enough materials on hand at the end of each month to equal 40% of the next month’s estimated usage. The raw materials inventory is expected to be 24,192 pounds on September 30, 2010.
•The cost per pound of raw material is $2, and 70% of all purchases are paid for in the month of purchase; the remainder is paid in the following month. The accounts payable for raw material purchases is expected to be $36,461 on September 30, 2010.
(a)Prepare a sales budget in units and dollars, by month and in total, for the fourth quarter (October, November, and December) of 2010.
October November December Total
Expected sales in units ______ _________ ________ _______ Selling price per unit ______ _________ ________ _______
Total sales ______ _________ ________ _______
(b)Prepare a schedule of cash collections from sales, by month and in total, for the fourth quarter of 2010. (Omit the “$” sign in your response.)
Cash collections from: October November December Total
September sales ______ _______
October sales ______ _________ _______
November sales _________ ________ _______
December sales ________ _______
Total cash collections ______ _________ ________ _______
(c)Prepare a production budget in units, by month and in total, for the fourth quarter of 2010.
October November December Total
Beginning inventory of finished goods _____ _________ ________ _______
Units to be produced _____ _________ _ _______ ______
Goods available for sale _____ _________ ________ _______
Desired ending inventory of finished _____ _________ ________ _______
goods (30% of next month’s _____ _________ ________ _______
budgeted sales) _____ _________ ________ _______
Quantity of goods sold _____ _________ ________ _______
(d)Prepare a materials purchases budget in pounds, by month and in total, for the fourth quarter of 2010
October November December Total
Beginning inventory of raw materials _____ _________ ________ _______
Purchases of raw materials _____ _________ ________ _______
Raw materials available for use _____ _________ ________ _______
Desired ending inventory of raw _____ _________ ________ _______
materials (40% of next month’s _____ _________ ________ _______
estimated usage)