Maureen Corporation estimated its overhead costs would be $23,700 per month exce
ID: 2444927 • Letter: M
Question
Maureen Corporation estimated its overhead costs would be $23,700 per month except for January when it pays the $140,010 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $163,710 ($140,010 + $23,700). The company expected to use 7,900 direct labor hours per month except during July, August, and September when the company expected 9,200 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 3,950 units of product in each month except July, August, and September, in which it produced 4,600 units each month. Direct labor costs were $24.30 per unit, and direct materials costs were $11.40 per unit.
Calculate a predetermined overhead rate based on direct labor hours. (Round your answer to 2 decimal places.)
Determine the total allocated overhead cost for January, March, and August. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)
Determine the cost per unit of product for January, March, and August. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Determine the selling price for the product, assuming that the company desires to earn a gross margin of $21.10 per unit. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Maureen Corporation estimated its overhead costs would be $23,700 per month except for January when it pays the $140,010 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $163,710 ($140,010 + $23,700). The company expected to use 7,900 direct labor hours per month except during July, August, and September when the company expected 9,200 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 3,950 units of product in each month except July, August, and September, in which it produced 4,600 units each month. Direct labor costs were $24.30 per unit, and direct materials costs were $11.40 per unit.
Explanation / Answer
Maureen Corporation Details Amt $ a Overheads /month 23,700 b Total OH in year 284,400 c Factory insurance paid in Jan 140,010 d Total Overheads in year 424,410 e Direct Labor Hrs @7900 hrs per month for 9 months 71,100 f Direct Labor hrs in Jul , Aug, Sep@9200 hrs /month 27,600 g Total Direct labor hrs in Year 98,700 Ans a. h Predtermined Overhead rate per Direct Labor Hour = d/g = 4.30 i Total units produced in 9 months @3950 units/month 35,550 j Total units produced in Jul,Aug,Sep@4600 units/month 13,800 k Total Units Produced in year 49,350 l Produced in Months Jan March August Units produced 3,950 3950 4600 Total units produced 12,500 Total Direct Labor Hrs for 12500 unitsin Jan Mar Aug 7,900 7900 9200 Total Direct Labor Hrs for Jan Mar Aug 25,000 Predtermined Overhead rate per Direct Labor Hour = d/g = 4.30 Ans b. Total Allocated OH cost for Jan Mar Sep 107,500 Total Direct Material cost for Jan Mar Aug @$11.40 for 12500 units 142,500 Total Direct Labor cost @24.30 for 25000 hrs 607,500 Total cost of 12500 units 857,500 Ans c Cost /Unit of product in Jan, Mar ,Aug 68.60 Total Cost Of production Amt $ Total Units Produced units 49,350 Total Direct labor hrs in Year 49,350 Cost Of Production Amt $ Total Direct Material cost in Year @11.4/unit 562,590 Total direct Labor cost in year @24.30/labor hr 1,199,205 Total Overheads in year 1,761,795 Total Cost Of Production in year 3,523,590 Cost Of Production/unit 71.40 Ans d Required profit /unit 21.10 Required selling Price/ Unit 92.50