Compute various manufacturing overhead rates.
Edmonton Pools manufactures swimming pool...
Compute various manufacturing overhead rates.
Edmonton Pools manufactures swimming pool equipment. Edmonton estimates total manufacturing overhead costs next year to be $1,400,000. Edmonton also estimates it will use 50,000 direct labor hours and incur $1,000,000 of direct labor cost next year. In addition, the machines are expected to be run for 40,000 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.
Answers: 1
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