Jacarda Company makes a composting bin that is subject to wide seasonal variations in demand. Unit...
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Jacarda Company makes a composting bin that is subject to wide seasonal variations in demand. Unit product costs are computed on a quarterly basis by dividing each quarter's manufacturing costs (materials, labour, and overhead) by the quarter's production in units. The company's estimated costs, by quarter, for the coming year are given below: Quarter $ First 764,400 $ Second Third Fourth 382,200 $191,100 $ 573,300 382,200 191,100 95,550 286,650 499,800 470,400 455,700 485,100 Direct materials Direct labour Manufacturing overhead Total manufacturing costs. $1,646,400 Number of units to be produced Estimated unit product cost $ 98,000 16.80 $ $1,043,700 $742,350 $1,345,050 49,000 24,500 21.30 $ 30.30 $ 73,500 18.30 Management finds the variation in unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead, since it is the largest element of cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product. After some analysis, you have determined that the company's overhead costs are mostly fixed and therefore show little sensitivity to changes in the level of production. Required: 1. Calculate the predetermined overhead rate based on units and direct labour? (Round your "per unit" answer to 2 decimal places.) Predetermined overhead rate-unit of product per unit Predetermined overhead rate-basis on direct labour cost % 2. Recompute the company's unit product costs in accordance with rate per unit in (1) above. (Round your answers to 2 decimal places.) 2. Recompute the company's unit product costs in accordance with rate per unit in (1) above. (Round your answers to 2 decimal places.) Quarter First Second Third Fourth Estimated unit product cost Jacarda Company makes a composting bin that is subject to wide seasonal variations in demand. Unit product costs are computed on a quarterly basis by dividing each quarter's manufacturing costs (materials, labour, and overhead) by the quarter's production in units. The company's estimated costs, by quarter, for the coming year are given below: Quarter $ First 764,400 $ Second Third Fourth 382,200 $191,100 $ 573,300 382,200 191,100 95,550 286,650 499,800 470,400 455,700 485,100 Direct materials Direct labour Manufacturing overhead Total manufacturing costs. $1,646,400 Number of units to be produced Estimated unit product cost $ 98,000 16.80 $ $1,043,700 $742,350 $1,345,050 49,000 24,500 21.30 $ 30.30 $ 73,500 18.30 Management finds the variation in unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead, since it is the largest element of cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product. After some analysis, you have determined that the company's overhead costs are mostly fixed and therefore show little sensitivity to changes in the level of production. Required: 1. Calculate the predetermined overhead rate based on units and direct labour? (Round your "per unit" answer to 2 decimal places.) Predetermined overhead rate-unit of product per unit Predetermined overhead rate-basis on direct labour cost % 2. Recompute the company's unit product costs in accordance with rate per unit in (1) above. (Round your answers to 2 decimal places.) 2. Recompute the company's unit product costs in accordance with rate per unit in (1) above. (Round your answers to 2 decimal places.) Quarter First Second Third Fourth Estimated unit product cost
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Related Book For
Managerial Accounting
ISBN: 978-1259024900
9th canadian edition
Authors: Ray Garrison, Theresa Libby, Alan Webb
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