E7.21 LO 7.3 7.7 Predetermined overhead rates for various cost drivers: manufacturer The following data relate to Reeve Ltd for the year just ended: Budgeted sales revenue Actual manufacturing overhead Budgeted machine hours Budgeted direct labour hours $ 615000 $1020000 15.000 30000 Budgeted direct labour rate $ 42 Budgeted manufacturing overhead $1092000 Actual machine hours 16500 Actual direct labour hours 27.000 Actual direct labour rate $ 43 Required 1. Calculate the firm's predetermined and actual overhead rates for the year using each of the following cost drivers:

(a) machine hours

(b) direct labour hours

(c) direct labour cost. 2. Would you recommend using an actual overhead rate or a predetermined overhead rate for Reeve Ltd? Explain your answer.