Morris Company Makes One Product,and It Expects to Incur a Total

question 8

Essay

Morris Company makes one product,and it expects to incur a total of $600,000 in indirect (overhead)costs during the current year.Production of the product for the year is expected to be: $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Quarter
$$\begin{array} { | l | l| l | l | l r | r | } \hline & 1 & 2 & 3 & 4 \\\hline \begin{array} { l } \text { Estimated } \\\text { production in } \\\text { units }\end{array} & 40,000 & 15,000 & 27,000 & 38,000 \\\hline\end{array}$$ Required:
1)Calculate a predetermined overhead rate based on the number of units of product expected to be made during the current year.
2)Assuming that direct materials and direct labor costs are $10 and $15,respectively,determine the total cost per unit using the overhead rate you calculated in part (1).

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Definitions:

Commercial Aircraft

Airplanes designed specifically for carrying passengers and/or cargo for commercial airlines.

Ready-Mix Concrete

Concrete that is manufactured in a factory or batching plant, according to a set recipe, and then delivered to a worksite by truck mounted in–transit mixers.

Sunk Costs

Costs that have already been incurred and cannot be recovered or altered by current or future actions.

Cost Curves

Graphical representations that show the cost of production as a function of total quantity produced.