Michael & Co. expects overhead costs of $28,000 per month and direct production costs of $14 per unit. The estimated production activity for the current accounting period is as follows: $$\begin{array} { | c | c | c | c | c | }
\hline & 1 ^ { st } \text {Quarter } & \mathbf { 2 } ^ { \text {nd } } \text { Quarter } & \mathbf { 3 } ^ { \text {rd } } \text { Quarter } & 4 ^ { \text {th } } \text { Quarter } \
\hline \text { Units produced } & 11,700 & 9,200 & 6,350 & 12,750 \
\hline
\end{array}$$ The predetermined overhead rate based on units produced is: (Round the answer to 2 decimal places.)
A) $0.67 per unit.
B) $1.50 per unit.
C) $8.00 per unit.
D) $22.00 per unit.

Question

Michael & Co. expects overhead costs of $28,000 per month and direct production costs of $14 per unit. The estimated production activity for the current accounting period is as follows: $$\begin{array} { | c | c | c | c | c | } 
\hline & 1 ^ { st } \text {Quarter } & \mathbf { 2 } ^ { \text {nd } } \text { Quarter } & \mathbf { 3 } ^ { \text {rd } } \text { Quarter } & 4 ^ { \text {th } } \text { Quarter } \
\hline \text { Units produced } & 11,700 & 9,200 & 6,350 & 12,750 \
\hline
\end{array}$$ The predetermined overhead rate based on units produced is: (Round the answer to 2 decimal places.)
A) $0.67 per unit.
B) $1.50 per unit.
C) $8.00 per unit.
D) $22.00 per unit.

Quizplus · Accepted Answer

To calculate the predetermined overhead rate, we need to divide the total estimated overhead costs by the estimated production activity in units.

Total estimated overhead costs = $28,000

Estimated production activity = 17,500 units

Predetermined overhead rate = $28,000 ÷ 17,500 units = $1.60 per unit

Therefore, the closest option is C, which rounds to $8.00 per unit.

Michael & Co The Predetermined Overhead Rate Based on Units Produced Is: (Round