Solved

A Manufacturer Estimates That It Will Incur Variable Indirect Costs

Question 56

Essay
A manufacturer estimates that it will incur variable indirect costs for the month of October of $70,000 and $30,000 of fixed costs. The company uses direct labor hours to calculate the predetermined overhead rate and predicted that 3,000 direct labor hours would be used in October. Actual direct labor hours amounted to 3,200.
Required:
A) What is the variable predetermined indirect rate for October?
B) What is the fixed predetermined indirect cost rate for October?
C) What is the total allocation rate per direct labor hour for October?

A manufacturer estimates that it will incur variable indirect costs for the month of October of $70,000 and $30,000 of fixed costs. The company uses direct labor hours to calculate the predetermined overhead rate and predicted that 3,000 direct labor hours would be used in October. Actual direct labor hours amounted to 3,200.
Required:
A) What is the variable predetermined indirect rate for October?
B) What is the fixed predetermined indirect cost rate for October?
C) What is the total allocation rate per direct labor hour for October?

Correct Answer:

verifed

Verified

A) $70,000/3,000 = $23.33 per ...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents