a. Calculation of predetermined overhead rate based on direct labour hours | |||
Predetermined Overhead rate = Estimated Overheads / Estimated direct labour hours | |||
Predetermined Overhead rate =(446400/93000 | $ 4.80 | per labor hour | |
*Estimated overheads (22300*11+201100) | $ 446,400.00 | ||
**Direct labour hours (7300*9+9100*3 | 93,000 | ||
Answer b | |||
Direct Labour hours required per unit = Actual DLH / Total Units produced | |||
93000/(3650*9+4550) | 2.49 | DLH/ Unit | |
b. Computation of total allocated overhead cost for January , March and August | |||
January | March | August | |
Units produced (A) | 3,650.00 | 3,650.00 | 4,550.00 |
Direct Labour hours per unit (B) | 2.49 | 2.49 | 2.49 |
Total Direct Labour hours (C=AXB) | 9,088.50 | 9,088.50 | 11,329.50 |
Overhead rate per direct labour hour (D) | $4.80 | $4.80 | $4.80 |
Overhead allocated (C X D) | $43,625 | $43,625 | $54,382 |
c. Computation of Cost per unit for January,March and August | |||
January | March | August | |
Direct Material | $10.20 | $10.20 | $10.20 |
Direct Labor | $25.00 | $25.00 | $25.00 |
Overheads (4.8*2.49) | $11.95 | $11.95 | $11.95 |
Cost per Unit | $47.15 | $47.15 | $47.15 |
d.Computation of selling price | |||
January | March | August | |
Cost per unit | $47.15 | $47.15 | $47.15 |
Add : Gross Margin per unit | $20.80 | $21.80 | $22.80 |
Price per unit | $67.95 | $68.95 | $69.95 |
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