Lehighton Chalk Company

HM8-32

Lehighton Chalk Company manufactures blackboard chalk for educational uses.  The company’s product is sold by the box at $50 per unit.  Lehighton uses an actual costing system, which means that the actual costs of direct material, direct labor, and manufacturing overhead are entered into work-in-process inventory.  The actual application rate for manufacturing overhead is computed each year; actual manufacturing overhead is divided by actual production (in units) to compute the application rate.  Information for Lehighton’s first two years of operation is as follows