Javadi Company makes a single product that is subject to wide seasonal variation

Question

Javadi 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. Its estimated costs, by quarter, for the coming year are given below:

Quarter

Javadi 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. Its estimated costs, by quarter, for the coming year are given below:

Explanation / Answer

1-a. Using the high-low method, estimate the fixed manufacturing overhead cost per quarter and the variable manufacturing overhead cost per unit. variable = (228,000 - 192,000)/(80,000 - 20,000) = $0.60 fixed = 228,000 - .60*80,000 = $180,000 Fixed manufacturing overhead cost: $180,000 per quarter Variable manufacturing overhead: $0.60 per unit 1-b. Compute the total manufacturign overhead cost, total manufacturing cost and unit product cost for the fourth quarter total manufacturig overhead cost = 60,000*.6 + 180,000 = $216,000 total manufacturing costs = 4.80*60,000 + 180,000 = 468,000 unit product cost = 468,000/60,000 = $7.80 per unit Total manufacturing overhead cost $216,000 Total manufacturingcost $468,000 Unit product cost $7.80 per unit

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.