Kitco Inc. is a specialty manufacturer of machine parts for various customers and uses a job cost
Question:
Kitco Inc. is a specialty manufacturer of machine parts for various customers and uses a job cost system to value its work in process, finished goods inventories, and cost of goods sold. The company uses a normal overhead rate to apply manufacturing overhead to the parts it manufactures. It is the end of the fiscal year, and the cost accounting department and manufacturing manager are working on developing a new default manufacturing overhead rate for the entire manufacturing plant. They have decided to use direct labor hours as a cost driver to apply overhead to each job. The company has budgeted sales of $21,000,000 for the upcoming fiscal year. The direct labor hours budgeted for the next fiscal year to meet the budgeted sales goal is 320,000 hours. The budgeted fixed manufacturing overhead for the upcoming fiscal year is $10,000,000 and the variable manufacturing overhead is $6,000,000. | |||
Required: | |||
From the above information, calculate the default manufacturing overhead rate to be used for the next fiscal year. |
Cost Accounting A Managerial Emphasis
ISBN: 978-0136126638
13th Edition
Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav