Exercise 14-13 a-c Crane Decorating uses a job order cost system to collect the

Question

Exercise 14-13 a-c Crane Decorating uses a job order cost system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year. $960,000 $982,800 40,000 40,000 Estimated overhead Estimated decorator hours Actual decorator hours The company uses Operating Overhead in place of Manufacturing Overhead. Compute the predetermined overhead rate. (Round answer to 2 decimal places, e.g. 25.55.) Predetermined overhead rate per decorator hour

Explanation / Answer

(a) Predetermined overhead rate = Estimated overhead / Estimated decorator hours = $960,000 / 40,000 = $24 per decorator hour

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