Companies calculate overhead rates so that they can have a more accurate estimate of the cost of production. Manufacturing overhead is often a significant component
Companies calculate overhead rates so that they can have a more accurate estimate of the cost of production. Manufacturing overhead is often a significant component of production cost. The following are calculations of overhead by a hypothetical company:
Rent on factory building………………………………………..…15,000.00
Wages paid to supervisors………………………………………...3,500.00
Utilities paid for factory………………………………………….....1,500.00
Wages paid to production workers……………………………….8,000.00
Dep. expense for production equipment……………………….10,000.00
Estimated number of hours of direct labor……………………...1,200.00
Required:
Calculate the overhead rate on the basis of the preceding information. Use direct labor hours as the cost driver.
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Step: 1
Compute the overhead rate as follows Particulars Amou...See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
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