Jasti Manufacturing Company produced 3,100 units of inventory in January 2011. I

Question

Jasti Manufacturing Company produced 3,100 units of inventory in January 2011. It expects to produce an additional 9,100 units during the remaining 11 months of the year. In other words, total production for 2011 is estimated to be 12,200 units. Direct materials and direct labor costs are $82 and $58 per unit, respectively. Jasti Company expects to incur the following manufacturing overhead costs during the 2011 accounting period. Production supplies $ 6,300 Supervisor salary 185,000 Depreciation on equipment 142,000 Utilities 16,000 Rental fee on manufacturing facilities 297,300 ________________________________________ a. Combine the individual overhead costs into a cost pool and calculate a predetermined overhead rate assuming the cost driver is number of units.

Explanation / Answer

overhead cost = 6300+185000+142000+16000 + 297300 = 646600 overhead rate = 646600/12200 = $53/unit

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