Erber, Inc. produces men's neckties and dress socks. Manufacturing overhead is assigned to production using an application rate based on direct labor hours.
(a.) For 2013, the company's cost accountant estimated that total overhead costs incurred would be $184,500, and that a total of 24,600 direct labor hours would be worked. Calculate the amount of overhead to be applied for each direct labor hour worked on a production run.
(b.) A production run of 500 neckties required raw materials that cost $3,120, and 140 direct labor hours at a cost of $8.00 per hour. Calculate the cost of each necktie produced.
(c.) At the end of February 2013, 420 neckties made in the above production run had been sold, and the rest were in ending inventory. Calculate the cost of the neckties sold that would have been reported in the income statement and the cost included in the February 28, 2013, finished goods inventory.

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The Answer of Erber, Inc. produces men's neckties and dress socks. Manufacturing overhead is assigned to production using an application rate based on direct labor hours.
(a.) For 2013, the company's cost accountant estimated that total overhead costs incurred would be $184,500, and that a total of 24,600 direct labor hours would be worked. Calculate the amount of overhead to be applied for each direct labor hour worked on a production run.
(b.) A production run of 500 neckties required raw materials that cost $3,120, and 140 direct labor hours at a cost of $8.00 per hour. Calculate the cost of each necktie produced.
(c.) At the end of February 2013, 420 neckties made in the above production run had been sold, and the rest were in ending inventory. Calculate the cost of the neckties sold that would have been reported in the income statement and the cost included in the February 28, 2013, finished goods inventory.