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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 23000
Year 2 19000
Year 3 24000
Year 4 22000

Calculate the Predetermined overhead rate that SloGo Manufacturing will apply if normal capacity is used.

a. $16.00
b. $15.50
c. $17.00
d. $16.50

1 Answer

2 votes

Final answer:

Based on the provided information, the calculation for the Predetermined overhead rate ($352,000 ÷ 25,000 units) yields $14.08 per unit, which does not match any of the provided answer choices. There appears to be an error with the question, as no correct answer from the given options can be determined.

Step-by-step explanation:

To calculate the Predetermined overhead rate that SloGo Manufacturing will apply using normal capacity, you divide the budgeted overhead for the year by the number of units expected to be produced. Using the provided figures: $352,000 budgeted overhead ÷ 25,000 units expected to be produced equals $14.08 per unit, which does not match any of the options provided (a. $16.00, b. $15.50, c. $17.00, d. $16.50). It seems there might be an error with either the question or the possible answers provided, as none of the answers matches the calculated rate. Therefore, I am unable to select an option from a, b, c, or d, as it would not represent an accurate predetermined overhead rate based on the given information. If we revisit the production data over the past four years given (Year 1: 23,000 units, Year 2: 19,000 units, Year 3: 24,000 units, Year 4: 22,000 units), the average units produced per year would be 22,000 units. It's possible we're meant to use a different base figure for the number of units or include additional considerations not provided.

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