Question

The manufacturing overhead budget at pendley corporation is based on budgeted direct labor-hours. the direct labor budget indicates that 7,700 direct labor-hours will be required in august. the variable overhead rate is $7.90 per direct labor-hour. the company's budgeted fixed manufacturing overhead is $147,840 per month, which includes depreciation of $24,930. 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:

Answer 1

Total variable overhead cost
7,700×7.9
=60,830

Total manufacturing overhead cost
60,830+147,840
=208,670

Predetermined oH rate
208,670÷7,700
=27.1