produced as the allocation base. Its estimated costs, by quarter, for the coming year are given...

Transcribed Image Text:

produced as the allocation base. Its estimated costs, by quarter, for the coming year are given below: Quarter Direct materials Direct labor Manufacturing overhead Total manufacturing costs (a) Number of units to be produced (b) Estimated unit product cost (a) (b) First $ 240,000 128,000 300,000 Second $ 120,000 64,000 220,000 $ 668,000 80,000 $ 8.35 $ 404,000 40,000 $ 10.10 Third $ 60,000 32,000 180,000 $ 272,000 20,000 $ 13.60 Fourth $ 180,000 96,000 ? $ ? 60,000 $ ? Management finds the variation in quarterly unit product costs to be confusing. It has been suggested that the problem lies with manufacturing overhead because it is the largest element of total manufacturing cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product. Required: 1. Assuming the estimated variable manufacturing overhead cost per unit is $2.00, what must be the estimated total fixed manufacturing overhead cost per quarter? 2. Assuming the assumptions about cost behavior from the first three quarters hold constant, what is the estimated unit product cost for the fourth quarter? 3. What is causing the estimated unit product cost to fluctuate from one quarter to the next? 4. Assuming the company computes one predetermined overhead rate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Assuming the company computes one predetermined overhead rate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Unit product cost $ 10.24 produced as the allocation base. Its estimated costs, by quarter, for the coming year are given below: Quarter Direct materials Direct labor Manufacturing overhead Total manufacturing costs (a) Number of units to be produced (b) Estimated unit product cost (a) (b) First $ 240,000 128,000 300,000 Second $ 120,000 64,000 220,000 $ 668,000 80,000 $ 8.35 $ 404,000 40,000 $ 10.10 Third $ 60,000 32,000 180,000 $ 272,000 20,000 $ 13.60 Fourth $ 180,000 96,000 ? $ ? 60,000 $ ? Management finds the variation in quarterly unit product costs to be confusing. It has been suggested that the problem lies with manufacturing overhead because it is the largest element of total manufacturing cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product. Required: 1. Assuming the estimated variable manufacturing overhead cost per unit is $2.00, what must be the estimated total fixed manufacturing overhead cost per quarter? 2. Assuming the assumptions about cost behavior from the first three quarters hold constant, what is the estimated unit product cost for the fourth quarter? 3. What is causing the estimated unit product cost to fluctuate from one quarter to the next? 4. Assuming the company computes one predetermined overhead rate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Assuming the company computes one predetermined overhead rate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Unit product cost $ 10.24