Question: Your Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for
Your Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for next year:
|
| Direct materials......................................... | $1,000 |
|
| Direct labor................................................ | $3,000 |
|
| Sales commissions..................................... | $4,000 |
|
| Salary of production supervisor................ | $2,000 |
|
| Indirect materials....................................... | $400 |
|
| Advertising expense.................................. | $800 |
|
| Rent on factory equipment........................ | $1,000 |
Your Company estimates that 500 direct labor-hours and 1,000 machine-hours will be worked during the year. What is the predetermined overhead rate for the
year?
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