Practice Problems - Review Final Exam BA 213 1. From the following details provi

Question

Practice Problems - Review Final Exam BA 213 1. From the following details provided by NutShell, Inc., prepare the manufacturing overhead budget for the year. Also, calculate the predetermined overhead allocation rate, using direct labor hours as the allocation base. First SecondThirdFourth Quarter Quarter Quarter Quarte 24,00 | 15,000| 18,000| 21,000| Budgeted production units Variable overhead cost per unit Fixed overhead costs: Depreciation Rent Direct Labor Hours $45$45$45$45 $3,000 $3,000 $3,000$3,000 $5,000$5,750$6,250$7,250 12,500 14,50017,200 12,80

Explanation / Answer

Predetermined Overhead rate = Total Overhead cost / Total no.of direct labour hours Calculation of total Overhead cost 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Budgeted Production units 15000 18000 21000 24000 x Variable Overhead cost per unit $45 $45 $45 $45 Variable Overhead Cost $675,000 $810,000 $945,000 $1,080,000 $3,510,000 Fixed Overhead cost $8,000 $8,750 $9,250 $10,250 $36,250 Total Overhead cost $683,000 $818,750 $954,250 $1,090,250 $3,546,250 Calculation of total direct labour hours 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Direct Labour hours 12500 14500 17200 12800 57000 Predetermined Overhead rate = $35,46,250 / 57000 hours = $62.21 per direct labour hour

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