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 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 Fourth

Direct Materials $386,400 $193,200 $96,600 $289,800

Direct Labour 193,200 96,600 48,300 144,900

Manufacturing Overhead 262,300 234,600 220,800 248,400

Total manufacturing costs $841,800 $524,400 $365,700 $683,100

# of units to be produced 92,000 46,000 23,000 69,000

Estimated unit product cost $9.15 $11.40 $15.90 $9.90

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. compute the company's unit product costs in accordance with your recommendations in (1) above.