Accounting
Answers
Answer: 1. Manufacturing overhead cost can be assigned to production using various methods, such as direct labor hours, machine hours, or by using a predetermined overhead rate. Depending on the nature of your business and its production activities, a predetermined overhead rate method may be the most cost effective method. This involves applying a predetermined rate to each unit of labor or material used in production to assign overhead costs. For example, fixed manufacturing overhead costs can be applied to each unit based on direct material cost or direct labor hours to calculate the total overhead cost. 2. To calculate the unit product cost with overhead costs assigned, we can use the following formula: Unit product cost = (Direct materials cost + Direct labor cost + Apportioned overhead cost) / Number of units to be produced Therefore, for the given example: Unit product cost = ($240,000+$128,000+($300,000/80,000))/80,000 Unit product cost = $8.35