Fanning Corporation estimated its overhead costs would be $22,100 per month except for January when it pays the $207,120 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $229,220 ($207,120 + $22,100). The company expected to use 7,700 direct labor hours per month except during July, August, and September when the company expected 9,700 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 3,850 units of product in each month except July, August, and September, in which it produced 4,850 units each month. Direct labor costs were $23.10 per unit, and direct materials costs were $10.30 per unit. Required Calculate a predetermined overhead rate based on direct labor hours. Determine the total allocated overhead cost for January, March, and August. Determine the cost per unit of product for January, March, and August. Determine the selling price for the product, assuming that the company desires to earn a gross margin of $21.60 per unit.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Fanning Corporation estimated its
Required
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Calculate a predetermined overhead rate based on direct labor hours.
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Determine the total allocated overhead cost for January, March, and August.
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Determine the cost per unit of product for January, March, and August.
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Determine the selling price for the product, assuming that the company desires to earn a gross margin of $21.60 per unit.
![Complete this question by entering your answers in the tabs below.
### Determine the total allocated overhead cost, the cost per unit of product and the selling price for the product for January, March, and August. Assume that the company desires to earn a gross margin of $21.60 per unit. (Do not round intermediate calculations. Round "Cost per unit" and "Selling price per unit" to 2 decimal places. Round your total allocated overhead cost to nearest whole dollar.)
| | January | March | August |
|---------------------------|---------|-------|--------|
| **Total allocated overhead cost** | | | |
| **Cost per unit** | | | |
| **Selling price per unit** | | | |
- [Req A]
- [Req B to D]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbe9c485f-7800-42c6-9e2a-230c778c41ae%2Fe9671fd1-1966-47c4-80ac-62e7252da251%2F8ldhzrd_processed.png&w=3840&q=75)
![### Predetermined Overhead Rate Calculation
#### Instructions
Complete this question by entering your answers in the tabs below.
#### Tabs
- **Req A**
- **Req B to D**
#### Question
Calculate a predetermined overhead rate based on direct labor hours. (Round your answer to 2 decimal places.)
#### Input Fields
- **Predetermined Overhead Rate**: [Text box] per labor hour
#### Navigation
- Previous: **Req A** [button, disabled]
- Next: **Req B to D** [button, enabled]
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The purpose of this exercise is to help you understand how to calculate the predetermined overhead rate based on direct labor hours. The predetermined overhead rate is essential in allocating manufacturing overhead costs to products. This rate is computed by dividing the estimated total manufacturing overhead cost by an estimated cost driver, such as direct labor hours.
For example, if the estimated manufacturing overhead cost is $100,000 and the estimated direct labor hours are 20,000, the predetermined overhead rate would be:
\[ \text{Predetermined Overhead Rate} = \frac{\$100,000}{20,000 \text{ labor hours}} = \$5 \text{ per labor hour} \]
This rate is then used to apply overhead to individual jobs or products based on the number of direct labor hours required for each.
Make sure to round your final answer to two decimal places for accuracy.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbe9c485f-7800-42c6-9e2a-230c778c41ae%2Fe9671fd1-1966-47c4-80ac-62e7252da251%2Fg5h908_processed.png&w=3840&q=75)
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