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 = 75009+94003 =	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

ekkarill92 answered 10 months ago

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