Question

Longobardi Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the labor-hours for the upcoming year at 30,600 labor-hours. The estimated variable manufacturing overhead was $6.18 per labor-hour and the estimated total fixed manufacturing overhead was $626,076. The actual labor-hours for the year turned out to be 27,100 labor-hours. The predetermined overhead rate for the recently completed year was closest to:

Answer 1

Predetermined manufacturing overhead rate= $26.64 per labor-hour

Step-by-step explanation:

Giving the following information:

Estimated the labor-hours= 30,600 labor-hours.

Estimated variable manufacturing overhead= $6.18 per labor-hour

Estimated total fixed manufacturing overhead= $626,076.

To calculate the predetermined overhead rate, we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (626,076/30,600) + 6.18

Predetermined manufacturing overhead rate= $26.64 per labor-hour