The manufacturing overhead budget at Pendley Corporation is based on budgeted labor-hours. The direct labor budget indicates that 6,000 direct labor-hours will be required in August. The variable overhead rate is $8.40 per direct labor- hour. The company's budgeted fixed manufacturing overhead is $109,800 per month, which includes depreciation of $24,970. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for August should be: A. $8.40 B. $18.30 C. $26.70 D. $23.20

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 13CE: Nashler Company has the following budgeted variable costs per unit produced: Budgeted fixed overhead...
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The manufacturing overhead budget at Pendley Corporation is
based on budgeted labor-hours. The direct labor budget
indicates that 6,000 direct labor-hours will be required in
August. The variable overhead rate is $8.40 per direct labor-
hour. The company's budgeted fixed manufacturing overhead is
$109,800 per month, which includes depreciation of $24,970. All
other fixed manufacturing overhead costs represent current
cash flows. The company recomputes its predetermined
overhead rate every month. The predetermined overhead rate
for August should be:
A. $8.40
B. $18.30
C. $26.70
D. $23.20
Transcribed Image Text:The manufacturing overhead budget at Pendley Corporation is based on budgeted labor-hours. The direct labor budget indicates that 6,000 direct labor-hours will be required in August. The variable overhead rate is $8.40 per direct labor- hour. The company's budgeted fixed manufacturing overhead is $109,800 per month, which includes depreciation of $24,970. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for August should be: A. $8.40 B. $18.30 C. $26.70 D. $23.20
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