Moscone Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the company estimated the labor-hours for the upcoming year at 78,000 labor-hours. The estimated variable manufacturing overhead was $9.99 per labor-hour and the estimated total fixed manufacturing overhead was $985,920.Required:Compute the company's predetermined overhead rate.
What will be an ideal response?
Estimated total manufacturing overhead = $985,920 + ($9.99 per labor-hour × 78,000 labor-hours) = $1,765,140
Predetermined overhead rate = $1,765,140 ÷ 78,000 labor-hours = $22.63 per labor-hour
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