Exercise Algo Product costingvarious issues LO
Ironstone Incorporated produces ceramic coffee mugs and pencil holders. Manufacturing overhead is assigned to production using an
application rate based on direct labor hours.
Required:
a For the company's cost accountant estimated that total overhead costs incurred would be $ and that a total of
direct labor hours would be worked. Calculate the amount of overhead to be applied for each direct labor hour worked on a
production run.
Note: Round your answer to decimal places.
b A production run of coffee mugs used raw materials that cost $ and used direct labor hours at a cost of $ per hour.
Calculate the cost of each coffee mug produced.
Note: Do not round intermediate calculations. Round your answer to decimal places.
c At the end of August coffee mugs made in the production run in part b had been sold and the rest were in ending
inventory. Calculate the cost of the coffee mugs sold that would have been reported in the income statement and the cost
included in the August finished goods inventory.
Note: Do not round intermediate calculations. Round your answers to decimal places.
