Florek Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: ?Total direct labor-hours10,000?Total fixed manufacturing overhead cost$31,000?Variable manufacturing overhead per direct labor-hour$2.50Required:a. Calculate the estimated total manufacturing overhead for the year.b. Calculate the predetermined overhead rate for the year.
What will be an ideal response?
a. Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base) = $31,000 + ($2.50 per direct labor-hour × 10,000 direct labor-hours) = $31,000 + $25,000 = $56,000
b. Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $56,000 ÷ 10,000 direct labor-hours = $5.60 per direct labor-hour
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