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 the year are 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.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Rasmussen Corporation expects to incur indirect
| January | February | March | April | |
| Estimated production in units | 6,000 | 7,000 | 3,000 | 4,000 |
Required
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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.
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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.
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