Question
The manufacturing overhead budget at Lamy Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 7,100 direct labor-hours will be required
The manufacturing overhead budget at Lamy Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 7,100 direct labor-hours will be required in August. The variable overhead rate is $8.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $132,770 per month, which includes depreciation of $24,850. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for August should be:
| August |
Budgeted direct labor-hours |
|
Variable manufacturing overhead rate |
|
Variable manufacturing overhead |
|
Fixed manufacturing overhead |
|
Total manufacturing overhead |
|
Direct labor-hours |
|
Predetermined overhead rate |
|
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