1. CBEA Sophomores’ Repair service is bidding on a project for a potential customer.

The manager
revealed that the total budgeted direct-labor costs for the firm are P700,000. The total
budgeted indirect costs are P650,000. The manager estimates that there are a total of 8,000
billable hours.

Required:
A. What is the budgeted direct-labor cost rate in this new project?
B. What is the budgeted indirect-cost rate assuming direct-labor cost is the allocation
base?
C. What should the manager bid on the project if the direct labor hours are estimated at
250 hours?

2. COST Control Manufacturing applies manufacturing overhead to jobs using a predetermined

overhead rate of 75% of direct labor cost. Any underapplied or overapplied overhead is closed
to Cost of Goods Sold at the end of the month. During August, the following transactions were
recorded by the company:

Raw materials (all direct materials):

Purchased during the month P30,000
Used in production P34,000
Labor:
Direct labor-hours worked during the month 4,000
Direct labor costs incurred P32,000
Indirect labor costs incurred P8,000
Manufacturing overhead costs incurred (total) P22,000
Inventories:
Raw materials (all direct) August 31 P10,000
Work in process, August 1 P8,400
Work in process, August 31 P16,000

Required: Determine the following:

A. The August 1 balance of Raw Materials.
B. The amount of manufacturing overhead applied to jobs in August.
C. The Cost of Goods Manufactured for August.
D. The overapplied or underapplied manufacturing overhead for the month. Label this amount
appropriately.