Exercise 15-13 (Part Level Submission) Tombert Decorating uses a job order cost

Question

Exercise 15-13 (Part Level Submission) Tombert 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. Estimated overhead Actual overhead Estimated decorator hours Actual decorator hours $1,010,000 $989,800 40,000 38,900 The company uses Operating Overhead in place of Manufacturing Overhead ? (a) Compute the predetermined overhead rate. (Round answer to 2 decimal places, eg. 25.55%.) Predetermined overhead rate s per decorator hour

Explanation / Answer

Predetermined overhead rate = Estimated overhead / Estimated decorator hours = $1,010,000 / 40,000 hours = $25.25 per decorator hour

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