Item 7

Item 7

The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Budgeted direct labor-hours 9,000 8,700 9,000 8,400

The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $3.25 per direct labor-hour and its total fixed manufacturing overhead is $58,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $14,500 per quarter.

Required:

1. Prepare the company's manufacturing overhead budget for the upcoming fiscal year.

2. Compute the company's predetermined overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year