Jacarda Company makes a composting bin that
by | Mar 18, 2020 | Uncategorized
Exercise 5-12 Varying Predetermined Overhead Rates
|
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 |
Second |
Third |
Fourth |
| Direct materials |
$ |
554,400 |
|
$ |
277,200 |
|
$ |
138,600 |
|
$ |
415,800 |
|
| Direct labour |
|
277,200 |
|
|
138,600 |
|
|
69,300 |
|
|
207,900 |
|
| Manufacturing overhead |
|
365,400 |
|
|
340,200 |
|
|
327,600 |
|
|
352,800 |
|
| Total manufacturing costs |
$ |
1,197,000 |
|
$ |
756,000 |
|
$ |
535,500 |
|
$ |
976,500 |
|
| Number of units to be produced |
|
84,000 |
|
|
42,000 |
|
|
21,000 |
|
|
63,000 |
|
| Estimated unit product cost |
$ |
14.25 |
|
$ |
18.00 |
|
$ |
25.50 |
|
$ |
15.50 |
|
| 1. |
Calculate the predetermined overhead rate based on units and direct labour?
| 2. |
Recompute the company’s unit product costs in accordance with your recommendations in (1) above.
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|
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