Nautical Accessories, Inc., manufactures women's boating hats. Manufacturing overhead is assigned to production on a machine hour basis. For 2013, it was estimated that manufacturing overhead would total $359,520 and that 21,400 machine hours would be used.
Required:
a. Calculate the predetermined overhead application rate that will be used for absorption costing purposes during 2013.
b. During April, 3,900 hats were made. Raw materials costing $6,240 were used, and direct labor costs totaled $9,165. A total of 780 machine hours were worked during the month of April. Calculate the cost per hat made during April.
c. At the end of April, 1,050 hats were in ending inventory. Calculate the cost of the ending inventory and the cost of the hats sold during April.