Compute various manufacturing overhead rates (Learning Objective 4)

Therrien Pools manufactures swimming pool equipment. Therrien estimates total man¬ ufacturing costs next year to be $1,200,000. Therrien also estimates it will use 50,000 direct labor hours and incur $1,000,000 of direct labor cost next year. In addition, the machines are expected to be run for 40,000 hours. Compute the predetermined manu¬ facturing overhead rate for next year under the following independent situations:

1. Assume that Therrien uses direct labor hours as its manufacturing overhead allocation base.

2. Assume that Therrien uses direct labor cost as its manufacturing overhead allocation base.

3. Assume that Therrien uses machine hours as its manufacturing allocation base.