Rasmussen Corporation expects to incur indirect overhead costs of $80,000 per month and direct manufacturing costs of $12 per unit. The expected production activity for the first four months of the year are as follows.     January February March April Estimated production in units 6,000 7,000 3,000 4,000   Required Calculate a predetermined overhead rate based on the number of units of product expected to be made during the first four months of the year. Allocate overhead costs to each month using the overhead rate computed in Requirement a. Calculate the total cost per unit for each month using the overhead allocated in Requirement b.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Rasmussen Corporation expects to incur indirect overhead costs of $80,000 per month and direct manufacturing costs of $12 per unit. The expected production activity for the first four months of the year are as follows.
 

  January February March April
Estimated production in units 6,000 7,000 3,000 4,000
 


Required

  1. Calculate a predetermined overhead rate based on the number of units of product expected to be made during the first four months of the year.

  2. Allocate overhead costs to each month using the overhead rate computed in Requirement a.

  3. Calculate the total cost per unit for each month using the overhead allocated in Requirement b.

**Instructions:**

Complete this question by entering your answers in the tabs below.

---

### Required A

### Required B

### Required C

Calculate a predetermined overhead rate based on the number of units of product expected to be made during the first four months of the year.

*Predetermined overhead rate* ➔ [_______] per unit

---

#### Navigation Options:

- [Required A]
- [**Required B**]

**Note:** "Required B" is currently highlighted, indicating that the user is on this tab. The "Required A" and "Required C" tabs can be accessed by clicking on them.

This interface invites users to calculate a predetermined overhead rate by inputting a value, specified as 'per unit', into a provided text box.
Transcribed Image Text:**Instructions:** Complete this question by entering your answers in the tabs below. --- ### Required A ### Required B ### Required C Calculate a predetermined overhead rate based on the number of units of product expected to be made during the first four months of the year. *Predetermined overhead rate* ➔ [_______] per unit --- #### Navigation Options: - [Required A] - [**Required B**] **Note:** "Required B" is currently highlighted, indicating that the user is on this tab. The "Required A" and "Required C" tabs can be accessed by clicking on them. This interface invites users to calculate a predetermined overhead rate by inputting a value, specified as 'per unit', into a provided text box.
### Allocation of Overhead Costs

**Objective:**
To allocate overhead costs to each month using the overhead rate computed in Requirement A.

#### Instructions:
1. Compute the overhead rate as specified in Requirement A.
2. Use this overhead rate to allocate the overhead costs for each month.
3. Fill in the allocated cost for each month (January, February, March, April) and compute the total overhead cost.

#### Allocation Table:
Below is the table where you need to input the allocated overhead costs:

| Month      | Allocated Cost |
|------------|-----------------|
| January    |                 |
| February   |                 |
| March      |                 |
| April      |                 |
| **Total**  |                 |

#### Steps to Follow:
1. Retrieve the overhead rate computed from Requirement A.
2. Multiply the overhead rate by the respective month's workload or applicable measure to determine the allocated cost.
3. Enter the calculated allocated cost in the corresponding row for each month.
4. Sum the allocated costs for January, February, March, and April and enter this total in the "Total" row.

#### Navigation:
- To review the computation of the overhead rate in Requirement A, click the "Required A" button.
- After allocating the overhead costs, proceed to the next step by clicking the "Required C" button.

By following these steps, you can accurately allocate overhead costs on a monthly basis using the given overhead rate, ensuring precise financial tracking and reporting.
Transcribed Image Text:### Allocation of Overhead Costs **Objective:** To allocate overhead costs to each month using the overhead rate computed in Requirement A. #### Instructions: 1. Compute the overhead rate as specified in Requirement A. 2. Use this overhead rate to allocate the overhead costs for each month. 3. Fill in the allocated cost for each month (January, February, March, April) and compute the total overhead cost. #### Allocation Table: Below is the table where you need to input the allocated overhead costs: | Month | Allocated Cost | |------------|-----------------| | January | | | February | | | March | | | April | | | **Total** | | #### Steps to Follow: 1. Retrieve the overhead rate computed from Requirement A. 2. Multiply the overhead rate by the respective month's workload or applicable measure to determine the allocated cost. 3. Enter the calculated allocated cost in the corresponding row for each month. 4. Sum the allocated costs for January, February, March, and April and enter this total in the "Total" row. #### Navigation: - To review the computation of the overhead rate in Requirement A, click the "Required A" button. - After allocating the overhead costs, proceed to the next step by clicking the "Required C" button. By following these steps, you can accurately allocate overhead costs on a monthly basis using the given overhead rate, ensuring precise financial tracking and reporting.
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