Gobert Corporation manufactures wooden tables and chairs. Their estimated direct manufacturing costs (cost of the wood,...
Gobert Corporation manufactures wooden tables and chairs. Their estimated direct manufacturing costs (cost of the wood, cost of labor of employees cutting wood and assembling tables and chairs) are $38/unit. Gobert Corp. expects to incur indirect overhead costs of $80,000 per month.
Expected production for the first four months of 2019 is as follows:
| January | February | March | April | |
|
Estimated production (in units) |
6,000 | 7,000 | 3,000 | 4,000 |
How much overhead would Gobert Corporation allocate to the month of March?
Homework Answers
Ans. Indirect overhead costs are equal in each month and direct overhead cost changes as per the production units.
*Calculation:
Particulars. March
Estimated production. 3,000
(*) Direct cost per unit . $38
Direct manufacturing cost (a) . $114,000
Indirect overhead cost (b). $80,000
Total overhead cost (a+b) . $194,000
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