Kingsport Containers Company makes a single product that is subject to wide seasonal variations in demand.  

The company uses a job-order costing system and computes plantwide predetermined overhead rates on a  quarterly basis using the number of units to be produced as the allocation base. Its estimated costs, by quarter, for the coming year are given below:

 ATTACHMENT PREVIEW Download attachment

Screen Shot 2019-11-10 at 12.50.41 AM.png

Quarter
First
Second
Third
Fourth
Direct materials
200, 000
100, 000
50, 000
150, 000
8
Direct labor
120, 000
60,000
30, 000
90, 000
Manufacturing overhead
230, 000
206, 000
194, 000 ?
0 Total manufacturing costs (a)
550, 000
366, 000
274, 000 ?
1 Number of units to be produced (b)
160, 000
80, 000
40, 000 120,000
2 Estimated unit product cost (a) : (b)
3.44
4.58
6. 85 ?
13
14
15 Management finds the variation in quarterly unit product costs to be confusing and difficult to work with.
16 It has been suggested that the problem lies with manufacturing overhead because it is the largest element of total manufacturing cost.
7 Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product.
18

Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"