The manufacturing overhead budget at Latronica Corporation is based on budgeted

Question

The manufacturing overhead budget at Latronica Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 7,800 direct labor-hours will be required in August. The variable overhead rate is $8.10 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $140,400 per month, which includes depreciation of $24,940. 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:

$22.60

$8.10

$26.10

$18.00

The manufacturing overhead budget at Latronica Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 7,800 direct labor-hours will be required in August. The variable overhead rate is $8.10 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $140,400 per month, which includes depreciation of $24,940. 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:

Explanation / Answer

Variable Overhead rate 8.10

Fixed Manufacturing Overhead = 140400/7800= 18

The predetermined overhead rate for August is 8.10+18 = $ 26.10

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