Calculate and Use Ovrehead Rate During the coming accounting year, Baker Manufacturing, Inc. anticipates the following costs, expenses, and operating data: Direct material (16,000 lb) $80,000 Direct labor (@10/hr) 200,000 Indirect materials 12,000 Indirect labor 22,000 Sales Commissions 34,000 Factory administration 16,000 Nonfactory administrative expenses 20,000 Other manufacturing overhead 80,000 a. Calculate the predetermined manufacturing overhead rate for the coming year for each of the following application bases: (1) direct labor hours, (2) direct labor costs, and (3) machine hours. b. For each item in requirement in requirement a, determine the proper application of manufacuring overhead to Job 63, to which 16 direct labor hours, $150 of direct labor cost, and 40 machine hours have been charged.

The predetermined overhead rate refers to the concept of computing the estimated value achieved by…

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Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 21E: Ellerson Company provided the following information for the last calendar year: During the year,...

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Calculate and Use Ovrehead Rate
During the coming accounting year, Baker Manufacturing, Inc. anticipates the following costs, expenses, and operating data:

Direct material (16,000 lb)		$80,000
Direct labor (@10/hr)		200,000
Indirect materials		12,000
Indirect labor		22,000
Sales Commissions		34,000
Factory administration		16,000
Nonfactory administrative expenses		20,000
Other manufacturing overhead		80,000

a. Calculate the predetermined manufacturing overhead rate for the coming year for each of the following application bases: (1) direct labor hours, (2) direct labor costs, and (3) machine hours.

b. For each item in requirement in requirement a, determine the proper application of manufacuring overhead to Job 63, to which 16 direct labor hours, $150 of direct labor cost, and 40 machine hours have been charged.

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