Cranston Company estimates the following overhead costs for the coming year: Equipment depreciation $160,000 Equipment maintenance 60,000 Supervisory salaries 40,000 Factory rent 100,000 Total $360,000 Cranston is also budgeting $600,000 in direct labor costs and 15,000 machine hours for the coming year. (a) Calculate the predetermined overhead rate using direct labor costs as the allocation base. (b) Calculate the predetermined overhead rate using machine hours as the allocation base.

Cranston Company estimates the following overhead costs for the coming year: Equipment depreciation $160,000 Equipment maintenance 60,000 Supervisory salaries 40,000 Factory rent 100,000 Total $360,000 Cranston is also budgeting $600,000 in direct labor costs and 15,000 machine hours for the coming year. (a) Calculate the predetermined overhead rate using direct labor costs as the allocation base. (b) Calculate the predetermined overhead rate using machine hours as the allocation base.

Name: Cranston Company estimates the following overhead costs for the coming
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Description: Cranston Company estimates the following overhead costs for the coming year: Equipment depreciation $160,000Equipment maintenance 60,000Supervisory salaries 40,000Factory rent

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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