Question

Problem 12-18A (Algo) Allocation to accomplish smoothing LO 12-1, 12-2, 12-3 Rundle Corporation estimated its overhead costs would be $23,100 per month except for January when it pays the $115,170 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $138,270 ($115,170 + $23,100). The company expected to use 7,400 direct labor hours per month except during July, August, and September when the company expected 9,700 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 4,850 units each month. Direct labor costs were $24.30 per unit, and direct materials costs were $11.40 per unit 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 $20.40 per unit. Complete this question by entering your answers in the tabs below. Reg A Reg B to D Calculate a predetermined overhead rate based on direct labor hours. (Round your answer to 2 decimal places.) Predetermined overhead rate per labor hour Req B to D >

Answer 1

Answer 1			$                4.10
Overhead except insurance (23100*12)		$       277,200
Annual insurance		$       115,170
Estimated total overhead			$         392,370
From Seasonal months (9700*3)		29,100
From Non-seasonal months (7400*9)		66,600
Divided by: Estimated direct labor hours			95,700
Predetermined overhead rate per hour			$                4.10
Answer 2	$          30,340	$         30,340	$           39,770
	January	March	August
Predetermined overhead rate per hour	$              4.10	$              4.10	$                4.10
Multiply: Direct labour hours	7,400	7,400	9,700
Total allocated overhead cost	$          30,340	$         30,340	$           39,770
Answer 3	$            43.90	$            43.90	$              43.90
	January	March	August
Total allocated overhead cost	$          30,340	$         30,340	$           39,770
Divided by: units	3,700	3,700	4,850
Overhead cost per unit	$              8.20	$              8.20	$                8.20
Direct material per unit	$            11.40	$            11.40	$              11.40
Direct labor per unit	$            24.30	$            24.30	$              24.30
Overhead cost per unit	$              8.20	$              8.20	$                8.20
Cost per unit	$            43.90	$            43.90	$              43.90
Answer 4	$            64.30	$            64.30	$              64.30
	January	March	August
Cost per unit	$            43.90	$            43.90	$              43.90
Add: Gross margin per unit	$            20.40	$            20.40	$              20.40
Selling price per unit	$            64.30	$            64.30	$              64.30