Thornton Corporation estimated its overhead costs would be$23,300 per month except for January when it pays the $182,880annual insurance premium on the manufacturing facility.Accordingly, the January overhead costs were expected to be$206,180 ($182,880 + $23,300). The company expected to use 7,900direct labor hours per month except during July, August, andSeptember when the company expected 9,100 hours of direct laboreach month to build inventories for high demand that normallyoccurs during the Christmas season. The company’s actual directlabor hours were the same as the estimated hours. The company made3,950 units of product in each month except July, August, andSeptember, in which it produced 4,550 units each month. Directlabor costs were $24.00 per unit, and direct materials costs were$10.20 per unit.
Required
Calculate a predetermined overhead rate based on directlabor hours.
Determine the total allocated overhead cost for January,March, and August.
Determine the cost per unit of product for January,March, and August.
Determine the selling price for the product, assumingthat the company desires to earn a gross margin of $21.30 perunit.
