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

question 78

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$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Quarter }$
$\begin{array} { | l | c | c | c | c | } \hline & 1 & 2 & 3 & 4 \\\hline\text { Estirnated production in units } &40,000&15,000&27,000&38,000\\\hline\end{array}$ 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).

---

Definitions:

Percentage Change

A mathematical calculation that shows how a quantity has changed over time as a proportion of the initial quantity, often used to measure growth or decline.

Inventory Investment

The stock of unsold goods held by a company during a given period, indicating the level of production that goes into inventories.

Gross Investment

represents the total amount spent on purchases of new capital and on replacing depreciated capital within an economy during a specified period.

Capital Stock

The total amount of physical, financial, and human assets used in the production of goods and services in an economy.