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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Predetermined Overhead Rate, Overhead Application

At the beginning of the year, Ilberg Company estimated the following costs:

Chapter 4, Problem 22BEA, Predetermined Overhead Rate, Overhead Application At the beginning of the year, Ilberg Company

Ilberg uses normal costing and applies overhead on the basis of direct labor cost. (Direct labor cost is equal to total direct labor hours worked multiplied by the wage rate.) For the month of December, direct labor cost was $43,700.

Required:

  1. 1. Calculate the predetermined overhead rate for the year.
  2. 2. Calculate the overhead applied to production in December.

1.

To determine

Calculate the predetermined overhead rate for the year.

Explanation

Predetermined Overhead Rate:

It refers to the rate determined by dividing the estimated annual overhead by the estimated annual activity level, made at the beginning of the year.

Calculation of predetermined overhead rate for the year:

The formula to calculate predetermined overhead rate is,

Predeterminedoverheadrate=EstimatedannualoverheadEstimated

2.

To determine

Calculate the overhead applied to production in December.

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