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ners 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
ners 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 alocation base. Its estimated costs, by quarter, for the coming year are given below: Quarter Direct materials Direct labor Manufacturing overhead First Second Third Fourth $ 240,000 $120,000 $ 60,000 $180,000 160,000 80,000 40,000 120,000 220,000 196,000 184,000 Total manufacturing costs (a) $ 620,000 $396,000 $284,000 $ 160,000 80,000 40,000 120,000 Number of units to be produced (b) Estimated unit product cost (a +b) S 3.88 S4.95 S 7.10 S ? 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 Variable manufacturing overhead per quarter per unit
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