Ransom & Co. expects overhead costs of $30,000 per month and direct production c

Question

Ransom & Co. expects overhead costs of $30,000 per month and direct production costs of $12 per unit.

The estimated production activity for the 2012 accounting period is as follows:

1st quarter     11,500

2nd quarter      9,000

3rd quarter      8,250

4th quarter     11,250

The predetermined overhead rate based on units produced is (rounded to the nearest penny) is

$0.75 per unit

$9.00 per unit

$1.33 per unit

$21.00 per unit

A.

$0.75 per unit

B.

$9.00 per unit

C.

$1.33 per unit

D.

$21.00 per unit

Explanation / Answer

solution :

option B is correct.

predetermined overhead rate=annual overhead cost/annual estimated production 9 per unit (30000*12)/(11500+9000+8250+11250)=360000/40000

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