Question
Thornton Corporation expects to incur indirect overhead costs of $171,825 per month and direct manufacturing costs of $12 per unit. The expected production activity for
Thornton Corporation expects to incur indirect overhead costs of $171,825 per month and direct manufacturing costs of $12 per unit. The expected production activity for the first four months of the year are as follows.
January | February | March | April | |||||
Estimated production in units | 4,500 | 7,200 | 4,500 | 7,500 | ||||
Required
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Calculate a predetermined overhead rate based on the number of units of product expected to be made during the first four months of the year.
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Allocate overhead costs to each month using the overhead rate computed in Requirement a.
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Calculate the total cost per unit for each month using the overhead allocated in Requirement b.
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