Item2

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Item 2

Jacarda 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 quarters manufacturing costs (materials, labour, and overhead) by the quarters production in units. The companys estimated costs, by quarter, for the coming year are given below:

	Quarter
	First			Second			Third			Fourth
Direct materials	$	501,600		$	250,800		$	125,400		$	376,200
Direct labour		250,800			125,400			62,700			188,100
Manufacturing overhead		347,700			302,100			279,300			324,900
Total manufacturing costs	$	1,100,100		$	678,300		$	467,400		$	889,200
Number of units to be produced		114,000			57,000			28,500			85,500
Estimated unit product cost	$	9.65		$	11.90		$	16.40		$	10.40

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 companys overhead costs are mostly fixed and therefore show little sensitivity to changes in the level of production.

Required:

1. Calculate the predetermined overhead rate based on units and direct labour? (Round your "per unit" answer to 2 decimal places.)

2. Recompute the companys unit product costs in accordance with rate per unit in (1) above. (Round your answers to 2 decimal places.)