Manufacturing overhead budget at Mahapatra Corporation: calculate predetermined overhead rate for a month
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Question
The manufacturing overhead budget at Mahapatra Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 9,000 direct labor-hours will be required in May. The variable overhead rate is $8.90 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $116,100 per month, which includes depreciation of $18,260. All other fixed manufacturing overhead costs represent current cash flows.
The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for May should be:
a. $21.80
b. $19.50
c. $8.90
d. $12.90
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