53-6 Compute various manufacturing overhead rates (Learning Objective 3) Edmonton Pools manufactures swimming pool equipment. Edmonton estimates total manufacturing overhead costs next year to be $1,400,000. Edmonton also estimates it will use 50,000 direct labor hours and incur $1,000,000 of direct labor cost next year. In addition, the machines are expected to be run for 40,000 hours. Compute the prede- termined manufacturing overhead rate for next year under the following independent situations: 1. Assume that the company uses direct labor hours as its manufacturing overhead allocation base. 2. Assume that the company uses direct labor cost as its manufacturing overhead allocation base. 3. Assume that the company uses machine hours as its manufacturing overhead allocation base.
53-6 Compute various manufacturing overhead rates (Learning Objective 3) Edmonton Pools manufactures swimming pool equipment. Edmonton estimates total manufacturing overhead costs next year to be $1,400,000. Edmonton also estimates it will use 50,000 direct labor hours and incur $1,000,000 of direct labor cost next year. In addition, the machines are expected to be run for 40,000 hours. Compute the prede- termined manufacturing overhead rate for next year under the following independent situations: 1. Assume that the company uses direct labor hours as its manufacturing overhead allocation base. 2. Assume that the company uses direct labor cost as its manufacturing overhead allocation base. 3. Assume that the company uses machine hours as its manufacturing overhead allocation base.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![53-6 Compute various manufacturing overhead rates (Learning Objective 3)
Edmonton Pools manufactures swimming pool equipment. Edmonton estimates total
manufacturing overhead costs next year to be $1,400,000. Edmonton also estimates it
will use 50,000 direct labor hours and incur $1,000,000 of direct labor cost next year. In
addition, the machines are expected to be run for 40,000 hours. Compute the prede-
termined manufacturing overhead rate for next year under the following independent
situations:
1. Assume that the company uses direct labor hours as its manufacturing overhead
allocation base.
2. Assume that the company uses direct labor cost as its manufacturing overhead
allocation base.
3. Assume that the company uses machine hours as its manufacturing overhead
allocation base.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc8fa29a8-a4da-47af-9ac8-6cdeec337a00%2F3ad3bd29-a269-42fe-a3d2-6d070cd3da0b%2Fvza511e.jpeg&w=3840&q=75)
Transcribed Image Text:53-6 Compute various manufacturing overhead rates (Learning Objective 3)
Edmonton Pools manufactures swimming pool equipment. Edmonton estimates total
manufacturing overhead costs next year to be $1,400,000. Edmonton also estimates it
will use 50,000 direct labor hours and incur $1,000,000 of direct labor cost next year. In
addition, the machines are expected to be run for 40,000 hours. Compute the prede-
termined manufacturing overhead rate for next year under the following independent
situations:
1. Assume that the company uses direct labor hours as its manufacturing overhead
allocation base.
2. Assume that the company uses direct labor cost as its manufacturing overhead
allocation base.
3. Assume that the company uses machine hours as its manufacturing overhead
allocation base.
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