Rasmussen Corporation expects to incur indirect overhead costs of $80,000 per month and direct manufacturing costs of $12 per unit. The expected production activity for the first four months of 2017 is as follows: January February March April Estimated production in units 6,000 7,000 3,000 4,000 Required Calculate a predetermined overhead rate based on the number of units of product expected to be made during the first four months of the year. Allocate overhead costs to each month using the overhead rate computed in Requirement a. Calculate the total cost per unit for each month using the overhead allocated in Requirement b.

Instructions are listed below.

Explanation:

Giving the following information:

Rasmussen Corporation expects to incur indirect overhead costs of $80,000 per month and direct manufacturing costs of $12 per unit. The expected production activity for the first four months of 2017 is as follows: January February March April Estimated production in units 6,000 7,000 3,000 4,000

Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

January:

Estimated manufacturing overhead rate = (80,000/6,000) + 12 = 25.33 per unit

February:

Estimated manufacturing overhead rate = $23.43

March:

Estimated manufacturing overhead rate = 38.67

April:

Estimated manufacturing overhead rate = $32

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

January = 6,000*25.33 = $151,980

February = 7,000*23.43 = $164,010

March = 3,000*38.67 = 116,010

April = 4,000*32 = $128,000