Salge Inc. bases its manufacturing overhead budget on budgeted direct labor- hou

Question

Salge Inc. bases its manufacturing overhead budget on budgeted direct labor- hours. The variable overhead rate is $8.10 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $74,730 per month, which includes depreciation of $20,670. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 5,300 direct labor-hours will be required in September.

The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for September should be:
A) $18.30
B) $14.10
C) $8.10
D) $22.20

Explanation / Answer

74,730/5300 = 14.1 14.10 + 8.10 = 22.20 answer b, 22.20

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