Techniques, Inc. uses a predetermined manufacturing overhead rate based on direc

Question

Techniques, Inc. uses a predetermined manufacturing overhead rate based on direct labor hours to apply its indirect product costs to jobs. The following information has been collected for the previous year: dir material 150K, dir labor 200K, indirect labor 50HK sales commission 25K, depreciation on factory 75K utilites - factory 125K, rent on office bldg 25K guards at office building 25K Techniques used 25,000 direct labor hours and s0.000 machine hours during the previous year. What is the predetermined overhead rate if Techniques used machine hours? 24 12 15 none of the above

Explanation / Answer

Total Manufacturing OH = Indirect Labor + Depreciation on Factory + Utilities Factory
= 50k + 75k +125k
= $ 250k

Total Machine hrs = 50k

Pre-Determined Manufacturing OH rate = Total Manufacturing OH/Total Machine hrs
= $ 250/50 = $ 5 per m/c hr

hence answer is 'D' None of these

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