Homework Answers
a. Calaculation of predetermined overhead rate
Predetermined overhead rate
= Estimated ovrhead cost for four months ÷ Estimated number of units produced for four months
= ($80000×4) ÷ (6000+7000+3000+4000)
= $320000 ÷ 20000
= $16 per unit
b. Allocation of Overhead cost to each month:
| Month | Allocation of Overhead |
| Jan (6000×$16) | $96000 |
| Feb (7000×$16) | $112000 |
| March (3000×$16) | $48000 |
| April (4000×$16) | $64000 |
c. Calaculation of total cost per unit for each month:
| . | jan | Feb | March | April |
| Production units (a) | 6000 | 7000 | 3000 | 4000 |
| Expected cost | ||||
| Overhead cost (b) | $96000 | $112000 | $48000 | $64000 |
| Direct cost (c) (a×$12) | $72000 | $84000 | $36000 | $48000 |
| Total cost (d = b+c) | $168000 | $196000 | $84000 | $112000 |
| Total cost per units (d/a) | $28 | $28 | $28 | $28 |
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