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Kingsport Containers Company makes a single product that is subject to wide seasonal variations in demand. The company uses a job-order costing system and computes
Kingsport Containers Company makes a single product that is subject to wide seasonal variations in demand. The company uses a job-order costing system and computes predetermined overhead rates on a quarterly basis using the number of units to be produced as the allocation base. lts estimated costs, by quarter, for the coming year are given below: Quarter Second Third $280,000 $140,000 $ 70,000 $ 210,000 First Fourth Direct materials Direct labor Manufacturing overhead 120,000 60,000 30,00090,000 220,000 196,000 184,000 Total manufacturing costs (a) $620,000 $396,000 $284,000 $ Number of units to be produced (b) Estimated unit product cost (a b) 120,000 60,000 30,00090,000 $5.17 $ 6.60 $ 9.47 $ Management finds the variation in quarterly unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead because it is the largest element of total manufacturing cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product. Required 1-a. Using the high-low method, estimate the fixed manufacturing overhead cost per quarter and the variable manufacturing overhead cost per unit. (Round the "Variable manufacturing overhead per unit" to 2 decimal places.) Fixed manufacturing overhead cost per quarter Variable manufacturing overhead $ 0.40 per unit 1-b. Compute the total manufacturing cost and unit product cost for the fourth quarter. (Round the "Unit product cost" to 2 decimal places.) Total manufacturing cost Unit product cost
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