Question

In: Accounting

Zachary Corporation estimated its overhead costs would be $22,700 per month except for January when it...

Zachary Corporation estimated its overhead costs would be $22,700 per month except for January when it pays the $167,820 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $190,520 ($167,820 + $22,700). The company expected to use 7,500 direct labor hours per month except during July, August, and September when the company expected 9,400 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 3,750 units of product in each month except July, August, and September, in which it produced 4,700 units each month. Direct labor costs were $23.70 per unit, and direct materials costs were $10.50 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.

***Please provide detail instructions on the below***:

Requirement A

Calculate a Pre-Determined overheard rate based on direct labor hours. (Round you answer to 2 decimal places).

Question: What is Pre-determined overhead rate per labor hour?

Predetermined overhead rate

per labor hour

Requirement B to D

Determine the total allocated overhead cost, the cost per unit of product and the selling price for the product for January, March, and August. Assume that the company desires to earn a gross margin of $21.70 per unit. (Do not round intermediate calculations. Round "Cost per unit" and "Price" to 2 decimal places.)

January

March

August

Total allocated overhead cost

Cost per unit

Price

Solutions

Expert Solution

A) The pre-determined overhead rate should be for the whole year.
Total estimated overhead = 22700*12+167820 = $       440,220
Total estimated direct labor hours = 7500*9+9400*3 = 95700 DLH
Pre-determined OH rate = 440220/95700 = $              4.60
B) January March August
Number of units produced 3750 3750 4700
Direct labor hours worked 7500 7500 9400
Total overhead allocated at $4.60 per hour 34500 34500 43240
C)
Material cost at $10.50 39375 39375 49350
Labor cost at $23.70 177750 177750 222780
Overhead allocated 34500 34500 43240
Total cost of production 251625 251625 315370
Cost per unit $           67.10 $         67.10 $      67.10
D) Selling price = Cost per unit+$21.70 = $           88.80 $         88.80 $      88.80

Related Solutions

Campbell Corporation estimated its overhead costs would be $22,700 per month except for January when it...
Campbell Corporation estimated its overhead costs would be $22,700 per month except for January when it pays the $206,820 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $229,520 ($206,820 + $22,700). The company expected to use 7,600 direct labor hours per month except during July, August, and September when the company expected 9,800 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season....
Walton Corporation estimated its overhead costs would be $22,200 per month except for January when it...
Walton Corporation estimated its overhead costs would be $22,200 per month except for January when it pays the $213,600 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $235,800 ($213,600 + $22,200). The company expected to use 7,500 direct labor hours per month except during July, August, and September when the company expected 9,500 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season....
Adams Corporation estimated its overhead costs would be $22,600 per month except for January when it...
Adams Corporation estimated its overhead costs would be $22,600 per month except for January when it pays the $170,400 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $193,000 ($170,400 + $22,600). The company expected to use 7,600 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....
Munoz Corporation estimated its overhead costs would be $23,900 per month except for January when it...
Munoz Corporation estimated its overhead costs would be $23,900 per month except for January when it pays the $120,180 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $144,080 ($120,180 + $23,900). The company expected to use 7,500 direct labor hours per month except during July, August, and September when the company expected 9,800 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season....
Franklin Corporation estimated its overhead costs would be $23,100 per month except for January when it...
Franklin Corporation estimated its overhead costs would be $23,100 per month except for January when it pays the $192,240 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $215,340 ($192,240 + $23,100). The company expected to use 7,700 direct labor hours per month except during July, August, and September when the company expected 9,500 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season....
Velez Corporation estimated its overhead costs would be $50,000 per month except for January when it...
Velez Corporation estimated its overhead costs would be $50,000 per month except for January when it pays the $30,000 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $80,000 ($30,000 + $50,000). The company expected to use 7,000 direct labor hours per month except during July, August, and September when the company expected 9,000 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season....
Baird Corporation estimated its overhead costs would be $22,400 per month except for January when it...
Baird Corporation estimated its overhead costs would be $22,400 per month except for January when it pays the $219,240 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $241,640 ($219,240 + $22,400). The company expected to use 7,800 direct labor hours per month except during July, August, and September when the company expected 9,800 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season....
Rooney Corporation estimated its overhead costs would be $22,600 per month except for January when it...
Rooney Corporation estimated its overhead costs would be $22,600 per month except for January when it pays the $134,520 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $157,120 ($134,520 + $22,600). The company expected to use 7,700 direct labor hours per month except during July, August, and September when the company expected 9,100 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season....
Thornton Corporation estimated its overhead costs would be $23,300 per month except for January when it...
Thornton Corporation estimated its overhead costs would be $23,300 per month except for January when it pays the $182,880 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $206,180 ($182,880 + $23,300). The company expected to use 7,900 direct labor hours per month except during July, August, and September when the company expected 9,100 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season....
Walton Corporation estimated its overhead costs would be $22,700 per month except for January when it...
Walton Corporation estimated its overhead costs would be $22,700 per month except for January when it pays the $138,000 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $160,700 ($138,000 + $22,700). The company expected to use 7,100 direct labor hours per month except during July, August, and September when the company expected 9,100 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season....
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT