Explore BrainMass

Explore BrainMass

    Calculate the Firm's Predetermined and Actual Overhead Rates

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    BUDGETED SALES REVENUE $205000
    ACTUAL MANUFACTURING OVERHEAD $340000
    BUDGETED MACHINE HOURS 10000
    BUDGETED DIRECT LABOUR HOUR 20000
    BUDGETED DIRECT LABOUR RATE $14
    BEDGETED MANUFACTURING OVERHEAD $364000
    ACTUAL MACHINE HOURS 11000
    ACTUAL DIRECT LABOUR HOURS 18000
    ACTUAL DIRECT LABOUR RATE $15

    Required:
    calculate the firm's predetermined and actual overhead rates for the year using each of the following cost drivers:
    -machines hours
    -direct labour hours
    -direct labour cost

    Would you recommend using an actual overhead rate or a predetermined overhead rate for noose supply company? Explain please.

    © BrainMass Inc. brainmass.com June 4, 2020, 2:37 am ad1c9bdddf
    https://brainmass.com/business/accounting/calculate-firms-predetermined-actual-overhead-rates-470114

    Solution Preview

    Solution is provided in a separate Excel file attached. It contains following parts.

    1. Cost driver and Formula for predetermined overhead Rate and calculation of predetermined Rate.

    2. Cost driver and Formula for Actual overhead Rate and calculation of Actual Rate.

    3. Calculation of Budgeted and Actual direct wages

    Notes:
    We would recommend using a predetermined overhead rate for noose supply company For the following reasons.

    1. Overhead costs are assigned to the production by means of predetermined overhead rate.
    When absorption is based on actual overhead ...

    Solution Summary

    The solution assists in calculating the firm's predetermined and actual overhead rates.

    $2.19

    ADVERTISEMENT