Benson Corporation estimated its overhead costs would be $22,500 per month except for January when it pays the $153,120 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $175,620 ($153,120 + $22,500). The company expected to use 7,900 direct labor hours per month except during July, August, and September when the company expected 9,100 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season. The company's actual direct labor hours were the same as the estimated hours. The company made 3,950 units of product in each month except July, August, and September, in which it produced 4,550 units each month. Direct labor costs were $24.70 per unit, and direct materials costs were $10.00 per unit. Required a. Calculate a predetermined overhead rate based on direct labor hours. b. Determine the total allocated overhead cost for January, March, and August. c. Determine the cost per unit of product for January, March, and August. d. Determine the selling price for the product, assuming that the company desires to earn a gross margin of $21.60 per unit.

Benson Corporation estimated its overhead costs would be $22,500 per month except for January when it pays the $153,120 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $175,620 ($153,120 + $22,500). The company expected to use 7,900 direct labor hours per month except during July, August, and September when the company expected 9,100 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season. The company's actual direct labor hours were the same as the estimated hours. The company made 3,950 units of product in each month except July, August, and September, in which it produced 4,550 units each month. Direct labor costs were $24.70 per unit, and direct materials costs were $10.00 per unit. Required a. Calculate a predetermined overhead rate based on direct labor hours. b. Determine the total allocated overhead cost for January, March, and August. c. Determine the cost per unit of product for January, March, and August. d. Determine the selling price for the product, assuming that the company desires to earn a gross margin of $21.60 per unit.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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