Adams Corporation estimated its overhead costs would be $22,500 per month except for January when it...
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Adams Corporation estimated its overhead costs would be $22,500 per month except for January when it pays the $160,860 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $183,360 ($160,860 + $22,500). The company expected to use 7,800 direct labor hours per month except during July, August, and September when the company expected 10,000 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 3,900 units of product in each month except July, August, and September, in which it produced 5,000 units each month. Direct labor costs were $23.40 per unit, and direct materials costs were $10.70 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 $21.70 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 Adams Corporation estimated its overhead costs would be $22,500 per month except for January when it pays the $160,860 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $183,360 ($160,860 + $22,500). The company expected to use 7,800 direct labor hours per month except during July, August, and September when the company expected 10,000 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 3,900 units of product in each month except July, August, and September, in which it produced 5,000 units each month. Direct labor costs were $23.40 per unit, and direct materials costs were $10.70 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 $21.70 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
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Fundamental Managerial Accounting Concepts
ISBN: 978-0078110894
6th Edition
Authors: Edmonds, Tsay, olds
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