Question
1)Vernon Corporation expects to incur indirect overhead costs of $136,400 per month and direct manufacturing costs of $17 per unit. The expected production activity for
1)Vernon Corporation expects to incur indirect overhead costs of $136,400 per month and direct manufacturing costs of $17 per unit. The expected production activity for the first four months of the year are as follows.
January | February | March | April | |||||
Estimated production in units | 5,100 | 8,300 | 4,700 | 6,700 | ||||
Required
Calculate a predetermined overhead rate based on the number of units of product expected to be made during the first four months of the year.
Allocate overhead costs to each month using the overhead rate computed in Requirement a.
Calculate the total cost per unit for each month using the overhead allocated in Requirement b.
2)Solomon Manufacturing Co. expects to make 31,800 chairs during the year 1 accounting period. The company made 5,000 chairs in January. Materials and labor costs for January were $16,100 and $25,800, respectively. Solomon produced 1,100 chairs in February. Material and labor costs for February were $9,900 and $12,100, respectively. The company paid the $890,400 annual rental fee on its manufacturing facility on January 1, year 1. The rental fee is allocated based on the total estimated number of units to be produced during the year. Required Assuming that Solomon desires to sell its chairs for cost plus 25 percent of cost, what price should be charged for the chairs produced in January and February? (Round intermediate calculations and final answers to 2 decimal places.)
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