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I tried using your solution/way to solve the problem below, but I
can’t arrived with the correct answer. We are able to answer the questions and check if it is correct or not, but none of your sample solutions is correct.
Please help.
Below is all the information:
_________________________________________________________________________________________________________________________
Kingsport Containers Company makes a single product that is subject to wide seasonal variations in demand. The company uses a job-order costing system and computes plantwide predetermined overhead rates on a quarterly basis using the number of units to be produced as the allocation base. Its estimated costs, by quarter, for the coming year are given below:
Quarter
First  Second  Third  Fourth
Direct materials $240,000  $120,000  $60,000  $180,000
Direct labor  120,000   60,000   30,000   90,000
Manufacturing overhead  220,000  196,000   184,000   ?
Total manufacturing costs (a) $580,000  $376,000 $274,000  $ ?
Number of units to be produced (b)  120,000   60,000   30,000   90,000
Estimated unit product cost (a) ÷ (b) $4.83  $6.27  $9.13  $ ?
Management finds the variation in quarterly unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead because it is the largest element of total manufacturing cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product.
Required: 1
1. Assuming the estimated variable manufacturing overhead cost per unit is $0.40, what must be the estimated total fixed manufacturing overhead cost per quarter?
2. Assuming the assumptions about cost behavior from the first three quarters hold constant, what is the estimated unit product cost for the fourth quarter?
3. What is causing the estimated unit product cause to fluctuate from one quarter to the next? (NO NEED TO ANSWER THIS)
4. Assuming the company computes one predetermined overhead rate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year.
 
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