Question

sorry thats its long! thank you

1. Dunn Company produced 500 units during its first month of operations and reported the following costs: Direct labor $40,000 Direct materials $65,000 Fixed administrative expense $62,000 Fixed manufacturing overhead $30,000 Fixed selling expenses $44,000 Variable administrative expense $12,000 Variable manufacturing overhead $15,000 Variable selling expense $13,000

Answer 1

Part 1) Part a) Variable Manufacturing cost per unit

Direct Labor	40000
Direct Materials	65000
Variable administrative expenses	12000
Variable manufacturing o/h	15000
Variable selling expenses	13000
Total variable manufacturing cost	145000
Variable cost per unit	145000/500=$290 per unit

Part b) Fixed Manufacturing cost per unit

Fixed administrative expenses	62000
Fixed manufacturing o/h	30000
Fixed selling expenses	44000
Total Fixed Cost	136000
Fixed cost per unit	136000/500=$272 per unit

Part c) Period and Product costs

Period Costs
Fixed administrative expenses	62000
Fixed selling expenses	44000
Variable administrative expenses	12000
Variable selling expenses	13000
Total Period costs	131000

Product costs
Direct Labor	40000
Direct Material	65000
Fixed manufacturing o/h	30000
Variable manufacturing o/h	15000
Total Product costs	150000

Part 2) OPTION A

Using multiple predetermined overhead rates means that manufacturing overhead will be applied to each of company's job using a different predetermined rate . It is little complex but more accurate than single plant wide overhead rate.

Part 3)Option A----$1800

Calculation of pre determined overhead rate

Forming deptt= Estimated Total manufacturing o/h/estimated machine hours

=325000/100000=3.25 per machine hour

Assembly dept = Estimated manufacturing o/h/estimated labour hours

=200000/80000=2.5

Total Manufacturing overhead applied

=400*3.25 +200*2.5 =1800