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s predetermined overhead rate f

s predetermined overhead rate f

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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A company bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor-hours for the upcoming year at 75,000 labor-hours. The estimated variable manufacturing overhead was $10.70 per labor-hour and the estimated total fixed manufacturing overhead was $1,237,500. The actual labor-hours for the year turned out to be 78,100 labor-hours. Compute the company's predetermined overhead rate for the recently completed year. **(Round your answer to 2 decimal places.)** --- Below the text is a table with a single row and two columns: | Predetermined overhead rate | per labor-hour | The table is intended for input or display of the calculated overhead rate value.
Transcribed Image Text:A company bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor-hours for the upcoming year at 75,000 labor-hours. The estimated variable manufacturing overhead was $10.70 per labor-hour and the estimated total fixed manufacturing overhead was $1,237,500. The actual labor-hours for the year turned out to be 78,100 labor-hours. Compute the company's predetermined overhead rate for the recently completed year. **(Round your answer to 2 decimal places.)** --- Below the text is a table with a single row and two columns: | Predetermined overhead rate | per labor-hour | The table is intended for input or display of the calculated overhead rate value.
Expert Solution
Calculation of estimated total manufacturing overhead
Estimated total variable manufacturing overhead (A) $802,500
Estimated total fixed manufacturing overhead (B) $1,237,500
Estimated total manufacturing overhead (C = A + B) $2,040,000

Note:
Estimated total variable manufacturing overhead = Estimated labor-hours * Rate per hour = 75,000 * $10.70 = $802,500

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