Exercise 2-11 (Algo) Varying Plantwide Predetermined Overhead Rates [LO2-1, LO2-2, LO2- 3] 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: Management finds the variation in quarterly unit product costs to be confusing. It has been suggested that the problem lies with manufacturing overhead because it is the largest element of total manufacturing cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product. Required: 1. Assuming the estimated variable manufacturing overhead cost per unit is $0.30, what must be the estimated total fixed manufacturing overhead cost per quarter? 2. Assuming the assumptions about cost behavior from the first three quarters hold constant, what is the estimated unit product cost for the fourth quarter? 3. What is causing the estimated unit product cost to fluctuate from one quarter to the next? 4. Assuming the company computes one predetermined overhead wate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year. Problem 2-16 (Algo) Plantwide Predetermined Overhead Rates; Pricing [LO2-1, LO2-2, LO2-3] Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates: During the year, Job 550 was started and completed. The following information is available with respect to this Job: Required: 1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base Under this approach: a. Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550 . c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550 ? 2. Assume that Landen's controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach: a. Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550. c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550 ? (Round your intermediate calculations to 2 decimal places. Round your Predetermined Overhead Rate answers to 2 decimal places and all other answers to the nearest whole dollar.).

1. Exercise 2-11 (Algo) Varying Plantwide Predetermined Overhead Rates [LO2-1, LO2-2, LO2-
3] 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:
Management finds the variation in quarterly unit product costs to be confusing. It has been
suggested that the problem lies with manufacturing overhead because it is the largest element of
total manufacturing cost. Accordingly, you have been asked to find a more appropriate way of
assigning manufacturing overhead cost to units of product. Required: 1. Assuming the estimated
variable manufacturing overhead cost per unit is $0.30, what must be the estimated total fixed
manufacturing overhead cost per quarter? 2. Assuming the assumptions about cost behavior from
the first three quarters hold constant, what is the estimated unit product cost for the fourth
quarter? 3. What is causing the estimated unit product cost to fluctuate from one quarter to the
next? 4. Assuming the company computes one predetermined overhead wate for the year rather
than computing quarterly overhead rates, calculate the unit product cost for all units produced
during the year.
Problem 2-16 (Algo) Plantwide Predetermined Overhead Rates; Pricing [LO2-1, LO2-2, LO2-3]
Landen Corporation uses a job-order costing system. At the beginning of the year, the company
made the following estimates: During the year, Job 550 was started and completed. The
following information is available with respect to this Job: Required: 1. Assume that Landen has
historically used a plantwide predetermined overhead rate with direct labor-hours as the
allocation base Under this approach: a. Compute the plantwide predetermined overhead rate. b.
Compute the total manufacturing cost of Job 550 . c. If Landen uses a markup percentage of
200% of its total manufacturing cost, what selling price would it establish for Job 550 ? 2.
Assume that Landen's controller believes that machine-hours is a better allocation base than
direct labor-hours. Under this approach: a. Compute the plantwide predetermined overhead rate.
b. Compute the total manufacturing cost of Job 550. c. If Landen uses a markup percentage of
200% of its total manufacturing cost, what selling price would it establish for Job 550 ? (Round
your intermediate calculations to 2 decimal places. Round your Predetermined Overhead Rate
answers to 2 decimal places and all other answers to the nearest whole dollar.)