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Callahan Pools manufactures swimming pool equipment. Callahan estimates total manufacturing overhead costs next year to be $1,500,000. Callahan also estimates it will use 31,250 direct

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Callahan Pools manufactures swimming pool equipment. Callahan estimates total manufacturing overhead costs next year to be $1,500,000. Callahan also estimates it will use 31,250 direct labor hours and incur $1,000,000 of direct labor cost next year. In addition, the machines are expected to be run for 37,500 hours. Compute the predetermined manufacturing overhead rate for next year under the following independent situations: 1. Assume that the company uses direct labor hours as its manufacturing overhead allocation base. 2. Assume that the company uses direct labor cost as its manufacturing overhead allocation base. 3. Assume that the company uses machine hours as its manufacturing overhead allocation base. 1. Compute the predetermined manufacturing overhead rate for next year assuming that the company uses direct labor hours as its manufacturing overhead allocation base. Identify the formula and compute the predetermined manufacturing overhead rate for next year using direct labor hours as the manufacturing overhead allocation base. Predetermined manufacturing Estimated manufacturing overhead costs / Estimated direct labor hours = overhead rate 1,500,000 31,250 = $ 48 per DL hour 2. Compute the predetermined manufacturing overhead rate for next year assuming that the company uses direct labor cost as its manufacturing overhead allocation base. Identify the formula and compute the predetermined manufacturing overhead rate for next year using direct labor cost as the manufacturing overhead allocation base. (Enter the rate as a whole percent.) Predetermined manufacturing overhead rate -L % of DL cost Actual direct labor cost Actual manufacturing costs Estimated direct labor cost Estimated machine hours Estimated manufacturing overhead costs

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