Question

SloGo Manufacturing expects to produce 25,000 units next year and has budgeted overhead for the year at $352,000. Over the past four years, SloGo Manufacturing produced the following number of units:

Year 1: 23,000
Year 2: 19,000
Year 3: 24,000
Year 4: 22,000
Calculate the predetermined overhead rate that SloGo Manufacturing will apply if normal capacity is used?

Answer 1

To calculate the predetermined overhead rate for SloGo Manufacturing, divide the budgeted overhead by the expected number of units to be produced.

Step-by-step explanation:

To calculate the predetermined overhead rate for SloGo Manufacturing, we need to divide the budgeted overhead by the expected number of units to be produced. In this case, the budgeted overhead for the year is $352,000 and the expected production is 25,000 units. Therefore, the predetermined overhead rate can be calculated as follows:

Predetermined Overhead Rate = Budgeted Overhead / Expected Production

Predetermined Overhead Rate = $352,000 / 25,000 units

Predetermined Overhead Rate = $14 per unit