Question

P12 Saved Help Save & Exit Submit Franklin Corporation estimated its overhead costs would be $22,100 per month except for January when it pays the $197040 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $219,140 ($197.040 - $22,100). The company expected to use 7400 direct labor hours per month except during July, August, and September when the company expected 9,900 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 3,700 units of product in each month except July, August, and September, in which it produced 4.950 units each month. Direct labor costs were $24.30 per unit, and direct materials costs were $10.60 per unit. points 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 $21.60 per unit References Complete this question by entering your answers in the tabs below. Req A Reqs B to D Calculate a predetermined overhead rate based on direct labor hours. (Round your answto 2 decimal places.) Predetermined overhead rate per labor hour Regs to D >

Answer 1

Ans: Pre-determined overhead based on direct labor hours:

Total overhead costs= 22100*12+197,040 =$462,240

Total direct labor hours= 7400*9+9900*3

= 96,300

Pre-determined overhead rate= 462,240/96,300

= 4.80 per labor hour

B).

Total overhead costs:

For Jan= 7400*4.80 = 35,520

for March= 7400*4.80=35,520

For August= 9900*4.80=47,520

C). Cost per unit=

Costs	Jan	March	August
Direct material(3700*10.60)	39,220	39,220	49995
Direct labor(3700*24.30)	89,910	89,910	119,070
Overhead	35,520	35,520	47,520
Total costs	164,650	164,650	216,585
No of units	3,700	3,700	4,900
Cost per unit	44.50	44.50	44.20

Direct materials=3700*10.60

For august= 4900*1.10

4.

Cost per unit	44.50	44.50	44.20
Gross margin	21.60	21.60	21.60
Price	66.10	66.10	65.80