Managerial Accounting G Granite Company Uses .gchegg Study! Guided Scx Ke e Gran

Question

Managerial Accounting

G Granite Company Uses .gchegg Study! Guided Scx Ke e Grand Company Uses A 1667/View Page 2 Jameson Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for the next year: 2. Direct materials Direct labor Utilities Expense on production $7,000 49,000 8,000 facility Sales commissions Depreciation on sales office 34,000 18,000 equipment Plant Manager Salary Factory Rent Indirect labor 81,000 29,000 87,000 16,000 Indirect Materials Jameson estimates that 29,400 direct labor hours will be worked during the ear. How much is the predetermined overhead rate if overhead is applied ased on direct labor hours? Hint: First use the numbers above to calculate budgeted factory overhead 13 ha

Explanation / Answer

Calculation of predetermined Overhead rate ( based on direct labor hours )

Note, that the predetermined overhead rate applies to manufacturing Overheads only. As such selling and administrative overheads are not taken. Direct materials and direct labor are not overheads.

Manufacturing Overhead Utilities Expenses 8000 Plant manager salary 81000 Factory rent 29000 Indirect labor 87000 Indirect materials 16000 Total 221000 Direct labor hours 29400 Predetermined OH rate 7.517

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