Question

Allocation to accomplish smoothing

Baird Corporation estimated its overhead costs would be $23,500 per month except for January when it pays the $162,360 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $185,860 ($162,360 + $23,500). The company expected to use 7,400 direct labor hours per month except during July, August, and September when the company expected 10,000 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 5,000 units each month. Direct labor costs were $24.90 per unit, and direct materials costs were $10.40 per unit.

Required

1. Calculate a predetermined overhead rate based on direct labor hours.
2. Determine the total allocated overhead cost for January, March, and August.
3. Determine the cost per unit of product for January, March, and August.
4. Determine the selling price for the product, assuming that the company desires to earn a gross margin of $20.20 per unit.

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 answer to 2 decimal places.) Predetermined overhead rate per labor hour

Answer 1

Date: Paje barcd predetermine Labour Yatr overhead Calulahon a) direat houri On + 185860 (Tomary 2.3 500 X11months Ovahead To tal cast $444340 +10000 x 3 nonte 7400 X9 montls Total Direur labour hour C66 00 +3o 000 90600 hours $4.6 per Ovuhead rate Predetemined 444360 96600 direet labou hour by Oueuhead uost allocated Total Tonuary Marh Augurt Pr deternined Oveuhead ralr 4.6 4.6 4.6 Pircar labou hours 1५०० 7५०० 10000 ALOctd Ouuhead cost 3५०५० 3५०५० 46000

. Page No: Date: Pase product 2 unit Coct pes Augrusat March Tanuay 24.9 24.9 24.9 Direct labou Loet 10.4 10.4 10.4 Matcrial cost Dircet Ovnheed Cost per unit 9.2 (See Note) 9.2 3.2 cost 44.5 44.5 44.5 Oveihead coct per unit Calulaion NOr: calular in $५५५३6० Ovewhrad cost Totas Total numbe unih(3700x9monts) + (S000 x 3nuontw) (3700 X) (so00 x 3) 48300 unib $3.2 per nt ५५५३6० Oveuhead ost per unit 48300 produet $ Seuing priu for the cost per unit 44.5 Gros Morgin pr unit Selling price 20.20 64. Sing priu $64.1 per unit LOntont) Thant You THIS HELPS HOPE I