Fil Bookmarks People Window Hel ome McGraw K y Mch 2 ag. x a McGraw x YO outlook

ID: 2420293 • Letter: F

Question

Fil Bookmarks People Window Hel ome McGraw K y Mch 2 ag. x a McGraw x YO outlook x Host at x D ezto.mheducation.com/hm.tpx Panel x x-D cPanel X X HostG McGraw. x 10 Outlook Adriana Company is highly automated and uses computers to control manufacturing operations. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of computer-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year Computer-hours Fixed manufacturing overhead cost Variable manufacturing overhead per computer-hour 88,000 $ 1,372,800 3.20 During the year, a severe economic recession resulted in cutting back production and a buildup of inventory in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year: Computer-hours Manufacturing overhead cost Inventories at year-end: 65,000 $1,320,000 Raw materials Work in process Finished goods Cost of goods sold $ 465,000 $ 210,000 $ 1,075,000 2,815,000 Required: 1. Compute the company's predetermined overhead rate for the year. (Round your answer to two decimal places.) Predetermined overhead rate per hour

Explanation / Answer

Computation of the companies predetermined overhead rate:

Details

$ / Hours

Fixed manufacturing overhead cost (A)

$ 1,372,800

Computer hours (B)

88000

Fixed manufacturing overhead per computer hour (A) / (B)

$ 15.60

Variable manufacturing overhead per computer hour

$ 3.20

Predetermined overhead rate

$ 18.80

Therefore, predetermined overhead rate is $18.80.