Cranston Company Estimates the Following Overhead Costs for the Coming

question 101

Essay

Cranston Company estimates the following overhead costs for the coming year: $$\begin{array} { l c } \text { Equipment depreciation } & \$ 160,000 \\\text { Equipment maintenance } & 60,000 \\\text { Supervisory salaries } & 40,000 \\\text { Factory rent } & \underline { 100,000 } \\\text { Total } & \$ 360,000 \\\hline\end{array}$$ Cranston is also budgeting $600,000 in direct labor costs and 15,000 machine hours for the coming year.
Required:
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.

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Definitions:

Cortisol

A steroid hormone released by the adrenal glands in response to stress and low blood-glucose concentration, playing a vital role in the body's stress response and affecting immune responses.

Inflammation

The body's natural response to injury or infection, leading to redness, warmth, swelling, and sometimes pain at the affected site.

ACTH

Adrenocorticotropic hormone, a hormone produced by the pituitary gland that stimulates the adrenal glands to release cortisol, important for stress response.

Pineal Gland

A small, pinecone-shaped gland in the brain that produces melatonin, which helps regulate sleep-wake cycles.