Managerial Accounting: P3-1 Rocky Mountain Outfitters manufactures cowboy boots

Managerial Accounting 
P3-1 Unit Cost Using Actual and Normal Costing 
Rocky Mountain Outfitters manufactures cowboy boots. Information related to a recent production is as follows: 
Estimated manufacturing overhead, 2004 240,000 
Estimated machine hours, 2004 12,000 
Direct labor cost, September 8,000 
Direct materials cost, September 5,000 
Supervisor’s salary, September 3,000 
Factory rent, September 1,800 
Factory utilities, September 800 
Indirect materials cost, September 2,000 
Machine hours worked, September 400 
During September, 500 pairs of boots were produced. 

Required: 
a. Using actual costing, what is the unit cost of one pair of boots produced during September? 
b. Using normal costing, with machine hours as the activity base, what is the unit cost of one pair of boots produced during September? 
c. If normal costing is used, was manufacturing overhead over-or under applied during September? By how much? 
d. What might have caused the amount of overhead applied to be different from the actual amount? 
e. Why would managers at rocky mountain choose to use normal costing rather than actual costing?
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