Question:
Tamra Corp. makes one product line. In February 2010, Tamra paid $530,000 in factory overhead costs. Of that amount, $124,000 was for January's factory utilities and $48,000 was for property taxes on the factory for the year 2010. February's factory utility bill arrived on March 12, 2010, and was only $81,000 because
the weather was significantly milder than in January. Tamra Corp. produced 50,000 units of product in both January and February 2010.
a. What were Tamra's actual factory overhead costs for February 2010?
b. Actual per-unit direct material and direct labor costs for February 2010 were $24.30 and $10.95. What was actual total product cost for February?
c. Assume that, other than factory utilities, all direct material, direct labor, and overhead costs for Tamra Corp. were equal in January 2010 and February 2010. Will product cost for the two months differ? How can such differences be avoided?