Jacarda Company makes a composting bin that is subject to wide seasonal variations in demand. Unit product costs are computed on a quarterly basis by dividing each quarter's manufacturing costs (materials, labour, and overhead) by the quarter's production in units. The company's estimated costs, by quarter, for the coming year are given below: Direct materials Direct labour Manufacturing overhead Total manufacturing costs Number of units to be produced Estimated unit product cost Predetermined overhead rate-unit of product Predetermined overhead rate-basis on direct labour cost Fourth $415,800 207,900 First Second Third 554,400 $277,200 $138,600 277,200 138,600 69,300 365,400 340,200 327,600 352,800 $1,197,000 $756,000 $535,500 $976,500 84,000 42,000 21,000 63,000 14.25 $ 18.00 $ 25.50 $ 15.50 $ Management finds the variation in unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead, since it is the largest element of cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product. After some analysis, you have determined that the company's overhead costs are mostly fixed and therefore show little sensitivity to changes in the level of production. Estimated unit product cost $ Required: 1. Calculate the predetermined overhead rate based on units and direct labour? (Round your "per unit" answer to 2 decimal places.) First Quarter 2. Recompute the company's unit product costs in accordance with rate per unit in (1) above. (Round your answers to 2 decimal places.) Quarter Second Third per unit % Fourth
Jacarda Company makes a composting bin that is subject to wide seasonal variations in demand. Unit product costs are computed on a quarterly basis by dividing each quarter's manufacturing costs (materials, labour, and overhead) by the quarter's production in units. The company's estimated costs, by quarter, for the coming year are given below: Direct materials Direct labour Manufacturing overhead Total manufacturing costs Number of units to be produced Estimated unit product cost Predetermined overhead rate-unit of product Predetermined overhead rate-basis on direct labour cost Fourth $415,800 207,900 First Second Third 554,400 $277,200 $138,600 277,200 138,600 69,300 365,400 340,200 327,600 352,800 $1,197,000 $756,000 $535,500 $976,500 84,000 42,000 21,000 63,000 14.25 $ 18.00 $ 25.50 $ 15.50 $ Management finds the variation in unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead, since it is the largest element of cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product. After some analysis, you have determined that the company's overhead costs are mostly fixed and therefore show little sensitivity to changes in the level of production. Estimated unit product cost $ Required: 1. Calculate the predetermined overhead rate based on units and direct labour? (Round your "per unit" answer to 2 decimal places.) First Quarter 2. Recompute the company's unit product costs in accordance with rate per unit in (1) above. (Round your answers to 2 decimal places.) Quarter Second Third per unit % Fourth
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Jacarda Company makes a composting bin that is subject to wide seasonal variations in demand. Unit product costs are computed on
a quarterly basis by dividing each quarter's manufacturing costs (materials, labour, and overhead) by the quarter's production in units.
The company's estimated costs, by quarter, for the coming year are given below:
Direct materials
Direct labour
Manufacturing overhead
Total manufacturing costs
Number of units to be produced
Estimated unit product cost
Predetermined overhead rate-unit of product
Predetermined overhead rate-basis on direct labour cost
$
First
277,200
Second Third Fourth
554,400 $277,200 $138,600 $415,800
138,600 69,300 207,900
365,400 340,200 327,600 352,800
$1,197,000 $756,000 $535,500 $976,500
84,000 42,000 21,000 63,000
14.25 $ 18.00 $ 25.50 $ 15.50
Management finds the variation in unit product costs to be confusing and difficult to work with. It has been suggested that the problem
lies with manufacturing overhead, since it is the largest element of cost. Accordingly, you have been asked to find a more appropriate
way of assigning manufacturing overhead cost to units of product. After some analysis, you have determined that the company's
overhead costs are mostly fixed and therefore show little sensitivity to changes in the level of production.
Estimated unit product cost
$
Required:
1. Calculate the predetermined overhead rate based on units and direct labour? (Round your "per unit" answer to 2 decimal places.)
First
Quarter
2. Recompute the company's unit product costs in accordance with rate per unit in (1) above. (Round your answers to 2 decimal
places.)
Quarter
Second
Third
per unit
%
Fourth
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Step 1: Introduce to predetermined overhead rate
VIEWStep 2: Working for total estimated manufacturing overhead, total units and total estimated direct cost
VIEWStep 3: Working for predetermined overhead rate
VIEWStep 4: Working for direct materials cost per unit and direct labour cost per unit
VIEWStep 5: Working for estimated unit product cost
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