Finch Corporation estimated its overhead costs would be $22,200 per month except for January when it pays the $139,950 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $162,150 ($139,950 + $22,200). The company expected to use 7,400 direct labor hours per month except during July, August, and September when the company expected 9,300 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 3,700 units of product in each month except July, August, and September, in which it produced 4,650 units each month. Direct labor costs were $23.70 per unit, and direct materials costs were $11.30 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 $20.50 per unit.
Finch Corporation estimated its overhead costs would be $22,200 per month except for January when it pays the $139,950 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $162,150 ($139,950 + $22,200). The company expected to use 7,400 direct labor hours per month except during July, August, and September when the company expected 9,300 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 3,700 units of product in each month except July, August, and September, in which it produced 4,650 units each month. Direct labor costs were $23.70 per unit, and direct materials costs were $11.30 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 $20.50 per unit.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Req A
Req B to D
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 $20.50 per unit.
Note: 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.
b. Total allocated overhead cost
c. Cost per unit
d. Selling price per unit
January
March
< Req A
August
Req B to D >
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Transcribed Image Text:Finch Corporation estimated its overhead costs would be $22,200 per month except for January when it
pays the $139,950 annual insurance premium on the manufacturing facility. Accordingly, the January
overhead costs were expected to be $162,150 ($139,950 + $22,200). The company expected to use
7,400 direct labor hours per month except during July, August, and September when the company
expected 9,300 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 3,700 units of product in each month except July, August, and
September, in which it produced 4,650 units each month. Direct labor costs were $23.70 per unit, and
direct materials costs were $11.30 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 $20.50 per unit.
Complete this question by entering your answers in the tabs below.
Req A
Req B to D
Calculate a predetermined overhead rate based on direct labor hours.
Note: Round your answer to 2 decimal places.
Predetermined overhead rate
per labor hour
Req A
Req B to D >
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