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The manufacturing overhead budget at Foshay Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 7,300 direct labor-hours will be required in May. The variable overhead rate is $7.50 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $147,460 per month, which includes depreciation of $24,890. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for May should be:

Respuesta :

Answer:

$27.7 per hour

Explanation:

The computation is shown below:

As we know that

Predetermined overhead rate = Total estimated manufacturing overhead  ÷ Budgeted Labor hours

where,

Total estimated manufacturing overhead equals to

= 7,300 hours × $7.50 + $147,460

= $202,210

And, the estimated direct labor hours is 7,300

So, the predetermined overhead rate is

= $202,210 ÷ 7,300 hours  

=  $27.7 per hour

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