Question 3: Abdur Rahman has received an order from the neighbor land of FIJI ISLAND Company for the special dairy product he makes. Fiji Island Co asked for 5,000 units of the dairy products. To make...

Question 3: Abdur Rahman has received an order from the neighbor land of FIJI ISLAND Company for the special dairy product he makes. Fiji Island Co asked for 5,000 units of the dairy products. To make the product, Abdur Rahman needs $5 of direct materials per unit , 15 Minutes to make one unit, hourly payment is $12. For the purpose of calculating overhead, the company has estimated 30,000 direct labor hour would be needed this year. Estimated fixed manufacturing overhead $150,000 and variable manufacturing overhead is $4 per hour. During the season, the actual manufacturing overhead of Abdur Rahman Company was $250,000 with total 32,000 direct labor.

Required:

3a). Determine the product costs per unit also total product cost for Fiji Company.

3b). Why companies use predetermined overhead costs rather than actual manufacturing overhead costs to apply overhead to jobs.