Willow Creek Corporation bases its predetermined overhead rate on the estimated

Question

Willow Creek Corporation 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 32,500 labor hours. The estimated variable manufacturing overhead was $5.55 per labor hour and the estimated total fixed manufacturing overhead was $710,000. The actual labor hours for the year turned out to be 40,000 labor hours.

Required: Compute the company's predetermined overhead rate for the recently completed year.

Explanation / Answer

Statement showing computations Particulars Amount Estimated Labour hours             32,500.00 estimated total fixed manufacturing overhead           710,000.00 Predetermined fixed Overhead rate = 710,000/32,500                      21.85 Variable overhead rate                        5.55 Total Overhead rate = 21.85 + 5.55                      27.40

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.