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. 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. 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.
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code “Newclient”
The post 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. appeared first on Superb Professors.
Case study one page Case study one page Case study one page Case study one…
Business Calculus quiz that is 10 questions and has an hour time limit. Must be…
Write a 175- to 265-word response to the following: What constitutes “robust interoperability,†and what…
For this News Briefing Quest task , pick and analyze a U.S. political news article…
ACC 610 Milestone TwoGuidelines and Rubric This is the secondof three milestone assignments that will…
Please answer the questions in the attachment. I have sent you the required materials. Send…