Search.. er 8. Qutz 6 Help Save & Ex TB MC Qu. 8-72 The manufacturing overhead b

Question

Search.. er 8. Qutz 6 Help Save & Ex TB MC Qu. 8-72 The manufacturing overhead budget at Foshay Corporation... The manufacturing overhead budget at Foshay Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 7,100 direct labor-hours will be required in May. The vanable overhead rate Is $8.80 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $132,770 per month, which includes depreciation of $24, The company recomputes ts predetermined overhead rate every month. The predetermined overnead rate for May should be: 870. All other fixed manufacturing overhead costs represent current cash flows. $8.80 $27.50 $24 00 DOLL

Explanation / Answer

Predetermine overhead rate :

Fixed overhead rate = 132770/7100 = 18.70 per labour hour

Variable overhead rate = 8.80 per labour hour

Total predetermine overhead rate = (18.70+8.80) = 27.50 per labour hour

so answer is b) $27.50

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