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Henkes Corporation Bases Its Predetermined Overhead Rate on the Estimated

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Henkes 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 66,000 labor-hours. The estimated variable manufacturing overhead was $8.41 per labor-hour and the estimated total fixed manufacturing overhead was $1,533,180. The actual labor-hours for the year turned out to be 68,400 labor-hours.Required:Compute the company's predetermined overhead rate for the recently completed year.


Definitions:

Incremental Analysis

An examination of the additional benefits of an activity compared to the additional costs incurred by that same activity.

Lost Sales

Potential sales that were not realized due to stockouts, capacity issues, or other factors that prevented the completion of a sale.

Special Order

An order placed by a customer that requires a company to make a product with specifications that differ from their standard product line.

Incremental Analysis

The process of evaluating the financial consequences of choosing one option over another in decision-making.

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