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Calculate a predetermined overhead rate

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Question - Vernon Manufacturing Company produced 1,700 units of inventory in January 2018. It expects to produce an additional 8,400 units during the remaining 11 months of the year. In other words, total production for 2018 is estimated to be 10,100 units. Direct materials and direct labor costs are $83 and $56 per unit, respectively. Vernon expects to incur the following manufacturing overhead costs during the 2018 accounting period:

Production supplies $6,200

Supervisor salary 183,000

Depreciation on equipment 124,000

Utilities 34,000

Rental fee on manufacturing facilities 183,050

Required -

1. Combine the individual overhead costs into a cost pool and calculate a predetermined overhead rate assuming the cost driver is number of units.

2. Determine the cost of the 1,700 units of product made in January.

Reference no: EM132523151

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