Allocating overhead for product costing Hinch Manufacturing Company produced 1,200 units of inventory in January 2007. It expects to produce an additional 8,400 units during the remaining 11 months of the year. In other words, total production for 2007 is estimated to be 9,600 units. Direct materials and direct labor costs are $64 and $52 per unit, respectively. Hinch Company expects to incur the following manufacturing overhead costs during the 2007 accounting period.

Required

a. Determine the cost of the 1,200 units of product made in January.

b. Is the cost computed in Requirement a actual or estimated? Could Hinch improve accuracy by waiting until December to determine the cost of products? Identify two reasons that a manager would want to know the cost of products in January. Discuss the relationship between accuracy and relevance as it pertains to this problem.