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. Read the requirements. 1. Compute the predetermined manufacturing overhead rate for next year assuming that the company uses direct labor hours as its manufacturing overhead allocation base. Identify the formula and compute the predetermined manufacturing overhead rate for next year using direct labor hours as the manufacturing overhead allocation base. Predetermined manufacturing overhead rate = Requirements Compute the predetermined 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. per DL hour
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. Read the requirements. 1. Compute the predetermined manufacturing overhead rate for next year assuming that the company uses direct labor hours as its manufacturing overhead allocation base. Identify the formula and compute the predetermined manufacturing overhead rate for next year using direct labor hours as the manufacturing overhead allocation base. Predetermined manufacturing overhead rate = Requirements Compute the predetermined 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. per DL hour
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Compute the predetermined manufacturing overhead rate for next year assuming that the company uses direct labor hours as its manufacturing overhead allocation base.
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Transcribed Image Text: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.
Read the requirements.
1. Compute the predetermined manufacturing overhead rate for next year assuming that the company uses direct labor hours as its manufacturing overhead allocation base.
Identify the formula and compute the predetermined manufacturing overhead rate for next year using direct labor hours as the manufacturing overhead allocation base.
Predetermined manufacturing
overhead rate
Requirements
=
Compute the predetermined 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.
- X
3. Assume that the company uses machine hours as its manufacturing overhead
allocation base.
per DL hour
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