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In: Accounting

Sirmons Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At...

Sirmons 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 company estimated the labor-hours for the upcoming year at 85,000 labor-hours. The estimated variable manufacturing overhead was $10.77 per labor-hour and the estimated total fixed manufacturing overhead was $1,465,700. The actual labor-hours for the year turned out to be 74,000 labor-hours. The predetermined overhead rate for the recently completed year was closest to:

$10.77 per labor-hour

$28.01 per labor-hour

$27.74 per labor-hour

$17.24 per labor-hour

Solutions

Expert Solution

Total Variable overhead estimated=85000*10.77

=$915450

Total overhead estimated=Total Variable overhead estimated+Total fixed overhead estimated

=915450+1,465,700

=$2381150

predetermined overhead rate=Total overhead estimated/Estimated direct labor hours

=$2381150/85000

=$28.01 per labor hour(Approx)


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