QuestionAdams Manufacturing Company produced 1,800 units of inventory in January Year 2. It expects to produce an additional 9,300 units during the remaining 11 months of the year. In other words, total production for Year 2 is estimated to be 11,100 units. Direct materials and direct labor costs are and per unit, respectively. Adams expects to incur the following manufacturing overhead costs during the Year 2 accounting period.
\begin{tabular}{lr}
Production supplies & \\
Supervisor salary & 188,000 \\
Depreciation on equipment & 139,000 \\
Utilities & 22,000 \\
Rental fee on manufacturing facilities & 224,575
\end{tabular}
Required
a. Combine the individual overhead costs into a cost pool and calculate a predetermined overhead rate assuming the cost driver is number of units.
b. Determine the cost of the 1,800 units of product made in January.
Complete this question by entering your answers in the tabs below.
Required
Required
Combine the individual overhead costs into a cost pool and calculate a predetermined overhead rate assuming the cost driver is number of units.
Note: Round your answer to 2 decimal places.
Predetermined overhead rate
per unit
Required A
Required B
Studdy Solution
STEP 1
1. The total production for Year 2 is 11,100 units.
2. Overhead costs need to be combined into a single cost pool.
3. The predetermined overhead rate is calculated based on the number of units produced.
4. The cost of the 1,800 units produced in January includes direct materials, direct labor, and applied overhead.
STEP 2
1. Combine the individual overhead costs into a cost pool.
2. Calculate the predetermined overhead rate per unit.
3. Determine the total cost of the 1,800 units produced in January.
STEP 3
Combine the individual overhead costs:
- Production supplies: \$6,400
- Supervisor salary: \$188,000
- Depreciation on equipment: \$139,000
- Utilities: \$22,000
- Rental fee on manufacturing facilities: \$224,575
Total overhead cost pool:
\[
6,400 + 188,000 + 139,000 + 22,000 + 224,575 = 579,975 $
STEP 4
Calculate the predetermined overhead rate per unit:
STEP 5
Determine the cost of the 1,800 units produced in January:
1. Direct materials cost per unit: \$72
2. Direct labor cost per unit: \$59
3. Overhead cost per unit: \$52.25
Total cost per unit:
Total cost for 1,800 units:
The predetermined overhead rate per unit is:
The total cost for the 1,800 units produced in January is:
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