Question
Custom Jeans Works is establishing its predetermined overhead rate for 2018. The measure of activity is the number of machine hours that the cutting machines
Custom Jeans Works is establishing its predetermined overhead rate for 2018. The measure of activity is the number of machine hours that the cutting machines operate which is estimated to be 16,250 for 2018. Based on the following, what rate should Custom Jeans Works utilize for its predetermined overhead rate in 2018?
Estimated Annual Expenses for 2018 | |
Indirect materials | $ 230,450 |
Indirect labor | 398,000 |
Factory utilities | 50,000 |
Sales commissions | 125,000 |
Factory rent | 74,000 |
Factory maintenance | 16,000 |
Total | $ 893,450 |
a. | $39/machine hour | |
b. | $47/machine hour | |
c. | $63/direct labor hour | |
d. | $63/machine hour |
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