Asked by Kathryn Murphy on Jul 02, 2024
Verified
Odonnel Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $36,000, variable manufacturing overhead of $2.80 per direct labor-hour, and 10,000 direct labor-hours.The predetermined overhead rate is closest to:
A) $2.80 per direct labor-hour
B) $6.40 per direct labor-hour
C) $3.60 per direct labor-hour
D) $9.20 per direct labor-hour
Direct Labor-Hours
The total hours worked directly on manufacturing goods or providing services.
Manufacturing Overhead
Indirect costs related to manufacturing that do not include direct materials or direct labor.
- Determine the predetermined overhead rates for production departments, employing different criteria including machine-hours and direct labor-hours.
Verified Answer
EG
Erika Gutierrez6 days ago
Final Answer :
B
Explanation :
The predetermined overhead rate is calculated by adding the total fixed manufacturing overhead cost to the total variable manufacturing overhead cost (which is the variable rate multiplied by the estimated total direct labor-hours), and then dividing by the estimated total direct labor-hours. Here, it's ($36,000 + ($2.80 * 10,000)) / 10,000 = ($36,000 + $28,000) / 10,000 = $64,000 / 10,000 = $6.40 per direct labor-hour.
Learning Objectives
- Determine the predetermined overhead rates for production departments, employing different criteria including machine-hours and direct labor-hours.
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