# Question: Rochester Heating Systems Inc calculates its predetermined overhead rate on

Rochester Heating Systems, Inc. calculates its predetermined overhead rate on a quarterly basis. The following estimates were made for the current year.


The firm’s main product, part number SC71, requires \$600 of direct material and 20 hours of direct labor per unit. The labor rate is \$17 per hour.

Required:
1. Calculate the firm’s quarterly predetermined overhead rate for each quarter.
2. Determine the cost of one unit of part number SC71 if it is manufactured in February versus May.
3. Suppose the company’s pricing policy calls for a 10 percent markup over cost. Calculate the price to be charged for a unit of part number SC71 if it is produced in February versus May.
4. Calculate the company’s predetermined overhead rate for the year if the rate is calculated annually.
5. Based on your answer to requirement (4), what is the cost of a unit of part number SC71 if it is manufactured in February? In May?
6. What is the price of a unit of part SC71 if the predetermined overhead rate is calculatedannually?
View Solution:

Sales4
Views335