#19 The manufacturing overhead budget at XB1 Corporation is based on budgeted di
ID: 2476993 • Letter: #
Question
#19
The manufacturing overhead budget at XB1 Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 6,700 direct labor-hours will be required in April . The variable overhead rate is $2.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $105,190 per month, which includes depreciation of $16,500. All other fixed manufacturing overhead costs represent current cash flows.
The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for April should be:
a. $15.70
b. $18.20
c. $21.20
d. $2.50
Explanation / Answer
Calculation of the overhead rates for the month of April Direct Labour Hours 6700 Variable Overhead 2.5 per direct labour hour Fixed Overhead excluding depreciation 88690 105190-16500 Total 6700*2.5 16750 Total 105440 Overhead rate 105440/6700 15.73731 The correct answer is A. 15.70
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