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28 July, 00:06

Longobardi 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 Corporation estimated the labor-hours for the upcoming year at 38,600 labor-hours. The estimated variable manufacturing overhead was $5.90 per labor-hour and the estimated total fixed manufacturing overhead was $1,093,924. The actual labor-hours for the year turned out to be 35,800 labor-hours. The predetermined overhead rate for the recently completed year was closest to:

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  1. 28 July, 00:29
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    Overhead rate = 34.24

    Explanation:

    Giving the following information:

    Labor-hours for the upcoming year at 38,600.

    The estimated variable manufacturing overhead was $5.90.

    The estimated total fixed manufacturing overhead was $1,093,924.

    Overhead rate = Estimated indirect cost/allocation measure

    Overhead rate=[ (38600*5.90+1093924) ]/38600 = 34.24
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