Walton Corporation estimated its overhead costs would be $23,400 per month except for January when it pays the $135,870 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $159,270 ($135,870 + $23,400). The company expected to use 7,500 direct labor hours per month except during July, August, and September when the company expected 9,800 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 3,750 units of product in each month except July, August, and September, in which it produced 4,900 units each month. Direct labor costs were $24.90 per unit, and direct materials costs were $11.10 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 $20.30 per unit. Complete this question by entering your answers in the bs 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
Walton Corporation estimated its overhead costs would be $23,400 per month except for January when it pays the $135,870 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $159,270 ($135,870 + $23,400). The company expected to use 7,500 direct labor hours per month except during July, August, and September when the company expected 9,800 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 3,750 units of product in each month except July, August, and September, in which it produced 4,900 units each month. Direct labor costs were $24.90 per unit, and direct materials costs were $11.10 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 $20.30 per unit. Complete this question by entering your answers in the bs 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Walton Corporation estimated its overhead costs would be $23,400 per month except for January when it pays the $135,870 annual
insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $159,270 ($135,870 +
$23,400). The company expected to use 7,500 direct labor hours per month except during July, August, and September when the
company expected 9,800 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 3,750 units of
product in each month except July, August, and September, in which it produced 4,900 units each month. Direct labor costs were
$24.90 per unit, and direct materials costs were $11.10 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 $20.30 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
Reg A
Req B to D >
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Step 1: Define overhead rate
VIEWStep 2: a) Calculation of Predetermined Overhead rate by using direct labor hours:-
VIEWStep 3: b) Calculation of total allocated overhead cost for January, March and August :-
VIEWStep 4: c) Calculation of cost per unit of product for January, March, and August :-
VIEWStep 5: d) Calculation of selling pric
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