The manufacturing overhead budget at Pendley Corporation is based on budgeted di

Question

The manufacturing overhead budget at Pendley Corporation is based on budgeted direct labor-hours. The direct labor budget Indicates that 7,400 direct labor-hours will be required In August. The variable overhead rate is $7.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead Is $149,480 per month, which Includes depreciation of $24,900. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes Its predetermined overhead rate every month. The predetermined overhead rate for August should be: $27.80 $20.20 $7.60 $24.30

Explanation / Answer

pre determined overhead rate=7,400*$7.60+$149,480-$24,900/7,400=$24.43~$24.30 per direct labor hour.

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