1.
Introduction:
To compute: The estimated total fixed manufacturing overhead cost per quarter.
1.
Answer to Problem 3.11E
Fixed manufacturing overhead per quarter is $140,000.
Explanation of Solution
Manufacturing overhead in first quarter is $300,000.
Variable manufacturing overhead per unit is $2.00
Number of units to be produced in first quarter is 80000 units
Fixed manufacturing overhead per quarter is $140,000.
2.
Introduction: Job costing is a technique of determine the cost of a manufacturing job rather than the process of the job. Manufacturing overhead is applied to product or job order is determined as predetermined overhead.
To calculate: The estimated unit product cost for fourth quarter.
2.
Answer to Problem 3.11E
The estimate unit product cost for the fourth quarter is 8.93
Explanation of Solution
The manufacturing overhead in the fourth quarter is $260,000.
The estimate unit product cost for the fourth quarter:
| Particular | Amount ($) | |
| A | Direct material | 180000 |
| B | Direct labor | 96000 |
| C | Manufacturing overhead | 260000 |
| D = | Total | 536000 |
| E | Number of units to be purchased | 60000 |
| F | Estimated unit product cost | 8.93 |
The estimate unit product cost for the fourth quarter is 8.93
3.
Introduction: Job costing is a technique of determine the cost of a manufacturing job rather than the process of the job. Manufacturing overhead is applied to product or job order is determined as predetermined overhead.
The reason for the fluctuation in estimated unit product cost from one quarter to the next.
3.
Answer to Problem 3.11E
The unit of production is decreased and increase in unit product cost is increasing.
Explanation of Solution
There is increase in the unit product cost though there is decrease in the level of production. This increase is because fixed overhead is same for all the quarters whereas the number of units to be produced has decreased in second and third the quarters while again increased in fourth quarter but it is also less than the first quarter. This result in increase in unit product cost as this level of product is decreasing whereas fixed overhead is constant due to which it is allocated to fewer units.
4.
Introduction: Job costing is a technique of determine the cost of a manufacturing job rather than the process of the job. Manufacturing overhead is applied to product or job order is determined as predetermined overhead.
The recommendation for stabilization in the company’s unit product cost with the help of computation.
4.
Answer to Problem 3.11E
Predetermined rate should be used by the company for stabilizing the unit products cost
Explanation of Solution
Predetermined rate should be used by the company for stabilizing the unit products cost. It is the overhead rate which is used to allocated total manufacturing overhead to jobs.
Predetermine overhead rate:
Fixed manufacturing overhead for the year:
Calculation of variable manufacturing overhead:
Predetermined overhead rate:
| Particular | First quarter ($) | Second quarter ($) | Third quarter ($) | Fourth quarter ($) | |
| A | Direct material | 240000 | 120000 | 60000 | 180000 |
| B | Direct labor | 128000 | 64000 | 32000 | 96000 |
| C | Manufacturing overhead | 384000 | 192000 | 96000 | 288000 |
| D = | Total manufacturing cost | 752000 | 376000 | 188000 | 564000 |
| E | Number of units to be purchased | 80000 | 40000 | 20000 | 60000 |
| F | Estimated unit product cost | 9.40 | 9.40 | 9.4 | 9.40 |
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Chapter 3 Solutions
Managerial Accounting for Managers
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