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The Manchester Corporation uses a normal job-order costing system for product costing purposes. At the beginning of 2019, it decided to allocate manufacturing overhead during
The Manchester Corporation uses a normal job-order costing system for product costing purposes. At the beginning of 2019, it decided to allocate manufacturing overhead during 2019 to the various jobs using machine hours as the allocation base. The company has an annual capacity of 100,000 machine hours but expects the various jobs in 2019 to consume only 85% of the capacity. The budgeted amounts for the various manufacturing overhead items for 2019 are given below: Indirect labor $ 120,000 Indirect materials $ 45,000 Manufacturing related administrative salaries $ 180,000 Machine Depreciation $ 420,000 Assume that the company set up a single cost-pool, single manufacturing overhead allocation rate system using total budgeted manufacturing overhead for 2019 as the numerator and expected consumption of machine hours for 2019 as the denominator. The budgeted manufacturing overhead rate for 2019 is: (Show your work in the space below to get partial credit.)
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