Asked by Adriana PreciousLatina on Jun 07, 2024
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The manufacturing overhead budget at Foshay Corporation is based on budgeted direct labor-hours.The direct labor budget indicates that 5,800 direct labor-hours will be required in May.The variable overhead rate is $9.10 per direct labor-hour.The company's budgeted fixed manufacturing overhead is $104,400 per month, which includes depreciation of $8,120.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:
A) $9.10
B) $27.10
C) $18.00
D) $25.70
Variable Overhead Rate
The rate at which variable overhead costs are allocated to each unit of production, based on an activity driver.
Fixed Manufacturing Overhead
Costs in the manufacturing process that remain constant regardless of the production volume, including equipment depreciation and building lease expenses.
Direct Labor-Hours
The total hours worked by employees who are directly involved in the production of goods or services.
- Acquire knowledge about the composition and aspects of the manufacturing overhead budget.
Verified Answer
MV
Learning Objectives
- Acquire knowledge about the composition and aspects of the manufacturing overhead budget.