Morris Company Makes One Product, and It Expects to Incur

Essay

Morris Company makes one product, and it expects to incur a total of $600,000 in indirect (overhead) costs during 2014. Production of the product for the year is expected to be: $$\begin{array} { | l | l |r | r r | r | } \hline & { \text { Quarter } } \\\hline & 1 & 2 & 3 & 4 \\\hline \begin{array} { l } \text { Estimated } \\\text { production in } \\\text { units }\end{array} & 40,000 & 15,000 & & 27,000 & 38,000 \\\hline\end{array}$$
Required:
1) Calculate a predetermined overhead rate based on the number of units of product expected to be made during 2014.
2) Assuming that direct materials and direct labor costs are $10 and $15, respectively, determine the total cost per unit using the overhead rate you calculated in part a.