Oakwood Textiles computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, the company estimated that 18,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $75,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $2.50 per direct labor-hour. Oakwood's actual manufacturing overhead for the year was $95,000 and its actual total direct labor was 19,500 hours. Required: Compute the company's predetermined overhead rate for the year.

Oakwood Textiles computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, the company estimated that 18,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $75,000 of fixed manufacturing overhead expenses for the coming period and variable manufacturing overhead of $2.50 per direct labor-hour. Oakwood's actual manufacturing overhead for the year was $95,000 and its actual total direct labor was 19,500 hours. Required: 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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