Reference no: EM132665191

Vernon Corporation expects to incur indirect overhead costs of $72,300 per month and direct manufacturing costs of $19 per unit. The expected production activity for the first four months of 2017 is as follows:

                                       January            February          March          April

Estimated production in units  5,400               8,300          4,000           6,400

Required

Problem 1: Calculate a predetermined overhead rate based on the number of units of product expected to be made during the first four months of the year.

Problem 2: Allocate overhead costs to each month using the overhead rate computed in Requirement a.

Problem 3: Calculate the total cost per unit for each month using the overhead allocated in Requirement b.