A manufacturing company estimates that its total manufacturing overhead costs for the upcoming year will be $1,600,000.
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Question:
A manufacturing company estimates that its total manufacturing overhead costs for the upcoming year will be $1,600,000. The company expects to use 160,000 direct labor hours during the year. Calculate the predetermined overhead rate per direct labor hour. Discuss the implications of using direct labor hours as the allocation base for manufacturing overhead costs. Present a detailed calculation process.
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