The manufacturing overhead budget at Latronica Corporation is based on budgeted
ID: 2466689 • Letter: T
Question
The manufacturing overhead budget at Latronica Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 6,700 direct labor-hours will be required in August. The variable overhead rate is $7.20 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $138,690 per month, which includes depreciation of $24,900. 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:
The manufacturing overhead budget at Latronica Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 6,700 direct labor-hours will be required in August. The variable overhead rate is $7.20 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $138,690 per month, which includes depreciation of $24,900. 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:
Explanation / Answer
The predetermined overhead rate for August should be=6,700 direct labor-hours *$7.20 per direct labor-hour+ budgeted fixed manufacturing overhead is $138,690 per month-non cash expense depreciation of $24,900/6,700 direct labor-hours=$24.18 per unit
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