Maverick Electronics computes its predetermined overhead rate annually on the basis of direct labor hours. At the beginning of the year, it was estimated that 25,000 direct labor hours would be required for the period's estimated level of production. The company also estimated $80,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $3 per direct labor hour. Maverick's actual manufacturing overhead for the year was $100,000, and its actual total direct labor was 27,000 hours. Compute the company's predetermined overhead rate for the year.

Maverick Electronics computes its predetermined overhead rate annually on the basis of direct labor hours. At the beginning of the year, it was estimated that 25,000 direct labor hours would be required for the period's estimated level of production. The company also estimated $80,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $3 per direct labor hour. Maverick's actual manufacturing overhead for the year was $100,000, and its actual total direct labor was 27,000 hours. Compute the company's predetermined overhead rate for the year.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter7: The Master Budget And Flexible Budgeting

Section: Chapter Questions

Problem 23Q: If a factory operates at 100% of capacity one month, 90% of capacity the next month, and 105% of...

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