Rooney Corporation estimated its overhead costs would be $23,600 per month except for January when it pays the $146,100 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $169,700 ($146,100 + $23,600). The company expected to use 7,400 direct labor hours per month except during July, August, and September when the company expected 9,600 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season. The company's actual direct labor hours were the same as the estimated hours. The company made 3,700 units of product in each month except July, August, and September, in which it produced 4,800 units each month. Direct labor costs were $24.90 per unit, and direct materials costs were $10.70 per unit. Required a. Calculate a predetermined overhead rate based on direct labor hours. b. Determine the total allocated overhead cost for January, March, and August. c. Determine the cost per unit of product for January, March, and August. d. Determine the selling price for the product, assuming that the company desires to earn a gross margin of $20.20 per unit.

Rooney Corporation estimated its overhead costs would be $23,600 per month except for January when it pays the $146,100 annual insurance premium on the manufacturing facility. Accordingly, the January overhead costs were expected to be $169,700 ($146,100 + $23,600). The company expected to use 7,400 direct labor hours per month except during July, August, and September when the company expected 9,600 hours of direct labor each month to build inventories for high demand that normally occurs during the Christmas season. The company's actual direct labor hours were the same as the estimated hours. The company made 3,700 units of product in each month except July, August, and September, in which it produced 4,800 units each month. Direct labor costs were $24.90 per unit, and direct materials costs were $10.70 per unit. Required a. Calculate a predetermined overhead rate based on direct labor hours. b. Determine the total allocated overhead cost for January, March, and August. c. Determine the cost per unit of product for January, March, and August. d. Determine the selling price for the product, assuming that the company desires to earn a gross margin of $20.20 per unit.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter4: Job Order Costing

Section: Chapter Questions

Problem 2PA: York Company Is a machine shop that estimated overhead will be $50,000, consisting of 5,000 hours of...

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