Question

Rooney Corporation expects to incur indirect overhead costs of $124,000 per month and direct manufacturing costs of $23 per unit. The expected production activity for the first four months of 2017 is as follows: Estimated production in units January February March 5,400 8,900 4,200 April 6,300 Required a. Calculate a predetermined overhead rate based on the number of units of product expected to be made during the first four months of the year. b. Allocate overhead costs to each month using the overhead rate computed in Requirement a. c. Calculate the total cost per unit for each month using the overhead allocated in Requirement b. Complete this question by entering your answers in the tabs below. Required A Required B Required C Calculate a predetermined overhead rate based on the number of units of product expected to be made during the first four months of the year. Predetermined overhead rate per unit Required A Required B >

Answer 1

Total Estimated overhead cost over 4 months($124,000*4)	$                             4,96,000
Estiamted production over 4 months(5400+8900+4200+6300)	24800	units
Predtermined Overhead Rate($496,000/24800)	$                                  20.00	per unit
Month	Allocated Cost
January(5400 units*$20)	$                             1,08,000
February(8900 units*$20)	$                             1,78,000
March(4200 units*$20)	$                                84,000
April(6300 units*$20)	$                             1,26,000
Total	$                             4,96,000
Month	January	February	March	April
Number of units	5400	8900	4200	6300
Expected Costs:
Overhead	$                             1,08,000	$                                 1,78,000	$                                84,000	$                  1,26,000
Direct Costs	$                             1,24,200	$                                 2,04,700	$                                96,600	$                  1,44,900
Total Costs	$                             2,32,200	$                                 3,82,700	$                             1,80,600	$                  2,70,900
Cost per unit	$                                  43.00	$                                      43.00	$                                  43.00	$                       43.00