SectionI R.A.Mona estimates the (Note: The items are in no particular order.) V2

Question

SectionI R.A.Mona estimates the (Note: The items are in no particular order.) V2 following figures for the coming fiscal year Property Taxes on office building Salary of office staff Rent on factory building Direct Labor Office supplies Depreciation on factory building Dividends Factory utilities Sales commissions Interest expense Salary of factory supervisors Indirect Material Advertising expense Depreciation on factory equipment Wages of factory maintenance workers s 18,000 450,000 145,000 600,000 8,000 30,000 50,000 170,000 60,000 35,500 250,000 109,000 50,000 150,000 Small tools for factory Repair of factory equipment. Depreciation of office equipment 240,000 25,100 5,000 15,000 2,350,000 Raw materials purchases Lease for office copier 22,500 Required: Use your knowledge of how costs function to compute the predetermined overhead rate for the period January 1 to December 31, 2017 for R.A.Mona assuming the company intends to use direct labor cost as the basis to allocate overhead.

Explanation / Answer

Factory overhead: Rent on factory building 145000 Depreciation on factory building 30000 Factory utilities 170000 Salary of factory supervisors 250000 Indirect material 109000 Depreciation on factory equipment 150000 Wages of factory maintenance workers 240000 Small tools of factory 25100 Repair of factory equipment 5000 Total Factory overhead 1124100 Predetermined overhead rate = Factory overhead/Direct labor costs = 1124100/600000= 187.35%

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