acarda Company makes a composting bin that is subject to wide seasonal variations in demand. Unit product costs are computed on a quarterly basis by dividing each quarter$$s manufacturing costs $($materials$,$ labour, and overhead$)$ by the quarter$$s production in units. The company$$s estimated costs, by quarter, for the coming year are given below:

Quarter

First Second Third FourthJacarda Company makes a composting bin that is subject to wide seasonal variations in

demand. Unit product costs are computed on a quarterly basis by dividing each quarter's

manufacturing costs $($materials$,$ labour, and overhead$)$ by the quarter's production in units.

The company's estimated costs, by quarter, for the coming year are given below:

Management finds the variation in unit product costs to be confusing and difficult to work

with. It has been suggested that the problem lies with manufacturing overhead, since it is

the largest element of cost$.$ Accordingly, you have been asked to find a more appropriate

way of assigning manufacturing overhead cost to units of product. After some analysis, you

have determined that the company's overhead costs are mostly fixed and therefore show

little sensitivity to changes in the level of production.

Direct materials $ $162,000$ $ $81,000$ $ $40,500$ $ $121,500$

Direct labour $81,00040,50020,25060,750$

Manufacturing overhead $121,50094,50081,000108,000$

Total manufacturing costs $ $364,500$ $ $216,000$ $ $141,750$ $ $290,250$

Number of units to be produced $90,00045,00022,50067,500$

Estimated unit product cost $ $4\mathrm{.}05$ $ $4\mathrm{.}80$ $ $6\mathrm{.}30$ $ $4\mathrm{.}30$

Management finds the variation in unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead, since it is the largest element of cost$.$ Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product. After some analysis, you have determined that the company$$s overhead costs are mostly fixed and therefore show little sensitivity to changes in the level of production.

$1.$ Calculate the predetermined overhead rate based on units and direct labour

$2.$ Recompute the company$$s unit product costs in accordance with rate per unit in $(1)$ above.