Monte Company produces ski boots. At the beginning of the year, the cost manager estimated that overhead costs would be $11,640,000 and that the units producedwould be 1,200,000. Actual data concerning production for the past year follow:Quarter 1 Quarter 2 Quarter 3 Quarter 4 TotalUnits produced 400,000 160,000 80,000 560,000 1,200,000Prime costs $8,000,000 $3,200,000 $1,600,000 $11,200,000 $24,000,000Overhead costs $3,200,000 $2,400,000 $3,600,000 $2,800,000 $12,000,000
Required
1. Calculate the unit cost for each quarter and for the year using the following costs:
a. Actual prime costs
b. Actual overhead costs
c. Actual total manufacturing costs
2. What do the calculations in Requirement 1 tell you about actual costing?
3. Using supporting calculations, describe how normal costing would work.