Sheldon Manufacturing estimates the following activity for 2013:
• Expected production 10 000 units
• Expected direct labour hours 10 000 hours
• Expected manufacturing overhead $100 000.
Manufacturing overhead is allocated on the basis of direct labour hours. At the end of the financial period, the following information was collected:
• Direct labour hours 9000 hours
• Manufacturing overhead $120 000.Required:
a. Calculate the predetermined manufacturing overhead rate at the beginning of 2013.
b. Calculate the actual manufacturing overhead rate for 2013
c. Explain the difference between the rates calculated in a. and b. above.