- Kingsport Containers Company Makes A Single Product That Is Subject To Wide Seasonal Variations In Demand The Company U 1 (58.83 KiB) Viewed 54 times
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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 plantwide predetermined overhead rates on a quarterly basis using the number of units to be produced as the allocation base. Its estimated costs, by quarter, for the coming year are given below: Direct materials Direct labor Quarter First Second Third Fourth $240,000 $120,000 $ 60,000 $180,000 120,000 Manufacturing overhead 7 60,000 30,000 90,000 220,000 196,000 184,000 $580,000 $376,000 $274,000 $ 120,000 $ 4.83 $ Total manufacturing costs (a) Number of units to be produced (b) Estimated unit product cost (a) (b) ? 60,000 30,000 90,000 6.27 $ 9.13 $ Management finds the variation in quarterly unit product costs to be confusing. 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. Assuming the estimated variable manufacturing overhead cost per unit is $0.40, what must be the estimated total fixed manufacturing overhead cost per quarter? 2. Assuming the assumptions about cost behavior from the first three quarters hold constant, what is the estimated unit product cost for the fourth quarter? 3. What is causing the estimated unit product cost to fluctuate from one quarter to the next? 4. Assuming the
company computes one predetermined overhead rate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year. Answer is complete but not entirely correct. Complete this
question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4. < Prev 1 of 6 Next >
Complete this
question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Assuming the estimated variable manufacturing overhead cost per unit is $0.40, what must be the estimated total fixed manufacturing overhead cost per quarter? Fixed manufacturing overhead cost $ 182,000 Required 2 >
Required 1 Required 2 Required 3 Required 4 Assuming the assumptions about cost behavior from the first three quarters hold constant, what is the estimated unit product cost for the fourth quarter? (Do not round intermediate calculations and round the "Unit product cost" to 2 decimal places.) Unit product cost $ 5.42 < Required 1 Required 3 >
Required 1 Required 2 Required 3 Required 4 Assuming the
company computes one predetermined overhead rate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year. (Do not round intermediate calculations and round the "Unit product cost" to 2 decimal places.) Unit product cost $ 5.73 < Required 3 Required 4 >