Predetermined overhead rates for various cost drivers: manufacturer The following data relate to Denyer Ltd for the year just ended.

Budgeted sales revenue………………………………..$307,500

Actual manufacturing overhead……………………….$510,000

Budgeted machine hours…………………………………15,000

Budgeted direct labour hours……………………………30,000

Budgeted direct labour rate…………………………………..21

Budgeted manufacturing overhead……………………$546,000

Actual machine hours……………………………………16,500

Actual direct labour hours……………………………….27,000

Actual direct labour rate…………………………………$22.50

Required:

1. Calculate the firm’s predetermined and actual overhead rates for the year using each of the following cost drivers:

(a) Machine hours.

(b) Direct labour hours.

(c) Direct labour cost.

2. Would you recommend using an actual overhead rate or a predetermined overhead rate for D Ltd? Explain your answer.



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