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Terms in this set (18)

Espresso Item #1 - Predetermined overhead rate:
Predetermined overhead rate = Estimated overhead costs ÷ Total direct labor hours = $80,000 ÷ 16,000 hours = $5 per direct labor hour.

Travel Item #1 - Predetermined overhead rate:
Predetermined overhead rate = Estimated overhead costs ÷ Total direct labor hours = $80,000 ÷ 16,000 hours = $5 per direct labor hour.

Espresso Item #2 - Total manufacturing overhead allocated:
Predetermined overhead rate × Direct labor hours per unit × Units to produce = Total manufacturing overhead allocated; Espresso coffee cups = $5 × 10,000 hours = $50,000

Travel Item #2 - Total manufacturing overhead allocated:
Predetermined overhead rate × Direct labor hours per unit × Units to produce = Total manufacturing overhead allocated; Travel coffee mugs = $5 × 6,000 hours = $30,000.

Espresso Item #3 - Manufacturing cost per unit:
Manufacturing overhead per unit = Total manufacturing overhead allocated ÷ Units produced; Espresso coffee cups = $50,000 ÷ 10,000 units = $5 per unit; Direct materials per unit + Direct labor per unit + Manufacturing overhead per unit = Manufacturing cost per unit; Espresso coffee cups = $6 + $2 + $5 = $13.

Travel Item #3 - Manufacturing cost per unit:
Manufacturing overhead per unit = Total manufacturing overhead allocated ÷ Units produced; Espresso coffee cups = $50,000 ÷ 10,000 units = $5 per unit; Travel coffee mugs = $30,000 ÷ 4,000 units = $7.50 per unit. Direct materials per unit + Direct labor per unit + Manufacturing overhead per unit = Manufacturing cost per unit; Travel coffee mugs = $8 + $5 + $7.50 = $20.50.

Espresso Item #4 - Gross profit per unit:
Selling price − Manufacturing cost per unit = Gross profit per unit; Espresso coffee cups = $20 − $13 = $7.

Travel Item #4 - Gross profit per unit:
Selling price − Manufacturing cost per unit = Gross profit per unit; Travel coffee mugs = $25 − $20.50 = $4.50.