Kingsport Containers Company makes a single product with wide seasonal variations in demand. The company uses...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Kingsport Containers Company makes a single product with 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: Direct materials Direct labor Manufacturing overhead Total manufacturing costs (a) Number of units to be produced (b) Estimated unit product cost (a) + (b) First $ 240,000 120,000 230,000 $590,000 80,000 $7.38 Quarter Third Second $ 120,000 60,000 206,000 $ 386,000 40,000 $ 9.65 $ 60,000 30,000 194,000 $284,000 20,000 $ 14.20 Fourth $ 180,000 90,000 $? 60,000 $? Management finds the variation in quarterly unit product costs to be confusing. Accordingly, you have been asked to find a more appropriate way of applying manufacturing overhead cost to units of product. Required: 1. Assuming the estimated variable manufacturing overhead cost per unit is $0.60, 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 cost to fluctuate from one quarter to the next? 4. Assuming the company computes qne predetermined overhead rate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year. Kingsport Containers Company makes a single product with 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: Direct materials Direct labor Manufacturing overhead Total manufacturing costs (a) Number of units to be produced (b) Estimated unit product cost (a) + (b) First $ 240,000 120,000 230,000 $590,000 80,000 $7.38 Quarter Third Second $ 120,000 60,000 206,000 $ 386,000 40,000 $ 9.65 $ 60,000 30,000 194,000 $284,000 20,000 $ 14.20 Fourth $ 180,000 90,000 $? 60,000 $? Management finds the variation in quarterly unit product costs to be confusing. Accordingly, you have been asked to find a more appropriate way of applying manufacturing overhead cost to units of product. Required: 1. Assuming the estimated variable manufacturing overhead cost per unit is $0.60, 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 cost to fluctuate from one quarter to the next? 4. Assuming the company computes qne predetermined overhead rate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year.
Expert Answer:
Answer rating: 100% (QA)
Answer To address the questions provided lets break down the information and calculations step by st... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0077522940
15th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
Students also viewed these accounting questions
-
K In a survey of 240 males ages 20 to 24, 37% were neither in school nor working. In a survey of 200 females ages 20 to 24, 46% were neither in school nor working. These samples are random and...
-
1.3 Proposed Accounting Standards Updates and Comment Letters In December 2021, the FASB issued a proposed Accounting Standards Update (i.e., an Exposure Draft), Liabilities - Supplier Finance...
-
Howell reports on a study by Latan and Dabbs in which a researcher entered an elevator and dropped a handful of pencils, with the appearance that it was an accident. The question was whether the...
-
Transactions related to revenue and cash receipts completed by Acheville Architects Co. during the period September 2-30, 2014, are as follows: Sept. 2. Issued Invoice No. 793 to Nickle Co., $5,200....
-
When a least squares line is fit to the 7 observations in the starting salary data, we obtain SSE = 1.438. Calculate ,s2 and s.
-
CASH PAID FOR OPERATING EXPENSES The following information was obtained from Busby Company's income statement for 20-2, balance sheets as of December 31, 20-2 and 20-1, and auxiliary records:...
-
Identify all the distinct cyclic subgraphs of Graph \(A\). Use Graphs \(A, B\), and \(C\). Graph A Graph B Graph C
-
The Biometrix Corporation has been in operation for one full year (2010). Financial statements follow. Biometrixs management is interested in determining the value of the venture as of the end of...
-
Universal Leasing leases electronic equipment to a variety of businesses. The company's primary service is providing alternate financing by acquiring equipment and leasing it to customers under long...
-
Suppose that the risk-free interest rate is8%per annum with continuous compounding and that the dividend yield on a stock index is3%per annum with continuous compounding.The index is standing...
-
Find the first order partial derivatives at point P(9.12). f(x,y) = In (x+ y- y)
-
a ) How many customers were studied: b ) About how many customers spent less than $ 5 0 weekly? c ) About 7 5 % of the customers spent less than what amount? d ) 4 0 of the customers studied spend...
-
A researcher is interested in whether the variation in the size of human beings is proportional throughout each part of the human. To partly answer this question they looked at the correlation...
-
1) A loan of $8,600 is charged interest at 6.70% compounded semi-annually for the first 3.5 years, and then 5.20% compounded monthly thereafter. How much is owed at the end of 8 years? 2) A loan of...
-
Research different Computer and Mobile Operating System and Fill-up the table below with FOUR computer OS and FOUR mobile OS. Computer Operating System Operating Company System Year Developed...
-
. Sunland Company Worksheet For the Year Ended December 31, 2022 Income Statement Balance Sheet Account No. Account Titles Dr. Cr. Dr. Cr. 101 Cash 9,100 112 Accounts Receivable 10,600 130 Prepaid...
-
The Alert Company is a closely held investment-services group that has been very successful over the past five years, consistently providing most members of the top management group with 50% bonuses....
-
A firm is earning $8 per year. It can earn .20 (after corporate tax) on reinvested funds. Based on a constant dividend the firm's value is $40.27. If the funds are reinvested the firm's value after...
-
What does the practice and theory of international audit include aside from knowledge of ISAs?
-
Evaluate this quote: Every international business, large or small, should have an annual audit by an independent auditor. Why must an auditor review the financial statements of a company each year?
Study smarter with the SolutionInn App