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Lex Corporation estimates that its production for the coming year will be 500,000 units, which is 80% of normal capacity, with the following unit costs: Direct Materials P 40 Direct labor 60 Direct labor is paid at the rate of P24 per hour. The machine should be run for 20 minutes to produce one unit. Total estimated overhead is expected to consist of P4,000,000 for variable and P4,000,000 for fixed overhead. What is the predetermined overhead rate based on material cost? A. 100% B. 200% C. 40% D. 300%

Lex Corporation estimates that its production for the coming year will be 500,000 units, which is 80% of normal capacity, with the following unit costs: Direct Materials P 40 Direct labor 60 Direct labor is paid at the rate of P24 per hour. The machine should be run for 20 minutes to produce one unit. Total estimated overhead is expected to consist of P4,000,000 for variable and P4,000,000 for fixed overhead. What is the predetermined overhead rate based on material cost? A. 100% B. 200% C. 40% D. 300%

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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MCC 9 C6. (See the problem below) Lex Corporation estimates that its production for the coming year will be 500,000 units, which is 80% of normal capacity, with the following unit costs: Direct Materials P 40 Direct labor 60 Direct labor is paid at the rate of P24 per hour. The machine should be run for 20 minutes to produce one unit. Total estimated overhead is expected to consist of P4,000,000 for variable and P4,000,000 for fixed overhead. What is the predetermined overhead rate based on material cost? A. 100% В. 200% С. 40% D. 300%
Transcribed Image Text:MCC 9 C6. (See the problem below) Lex Corporation estimates that its production for the coming year will be 500,000 units, which is 80% of normal capacity, with the following unit costs: Direct Materials P 40 Direct labor 60 Direct labor is paid at the rate of P24 per hour. The machine should be run for 20 minutes to produce one unit. Total estimated overhead is expected to consist of P4,000,000 for variable and P4,000,000 for fixed overhead. What is the predetermined overhead rate based on material cost? A. 100% В. 200% С. 40% D. 300%
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