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Chapter 5 dividing each quarter's manufacturing costs ( units. The company's estimated costs, by quarter, forcoming year follow: and by the quarter's production in Quarter First Second Third Fourth Direct materials 128,000 300,000 $668,000 80,000 $8.35 $240,000 $120,000 $60,000 $180,000 96,000 260,000 $536,000 60,000 S8.93 64,000 220,000 32,000 180,000 $404,000 $272,000 20,000 $10.10$13.60 Manufacturing overhead Total manufacturing costs Number of units to be produced.. Estimated unit product cost 40,000 Management finds the variation in unit costs confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead because it is the largest element of cost. Accordingly you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product. After some analysis, you have determined that the company's overhead costs are mostly fixed and therefore show little sensitivity to changes in the level of production. 1. The company uses a job-order costing system. flow would you recommend that manufacturing over- 2. Recompute the company's unit product costs in accordance with your recommendations in (1) above. head cost be assigned to production? Be specific, and show computations

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