Longobardi Corporation Bases Its Predetermined Overhead Rate on the Estimated

question 312

Multiple Choice

Longobardi 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 Corporation estimated the labor-hours for the upcoming year at 35,700 labor-hours. The estimated variable manufacturing overhead was $5.93 per labor-hour and the estimated total fixed manufacturing overhead was $805,392. The actual labor-hours for the year turned out to be 33,200 labor-hours. The predetermined overhead rate for the recently completed year was closest to:

• A) $28.49 per labor-hour
• B) $22.56 per labor-hour
• C) $5.93 per labor-hour
• D) $30.64 per labor-hour

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Definitions:

Accumulating Manufacturing Costs

The process of collecting and categorizing all costs involved in producing goods.

Raw Materials

Basic materials and substances used in the initial stages of production to create finished goods.

Job Order Cost System

An accounting system that assigns costs to specific production batches or jobs, useful for companies producing unique or custom products.

Process Cost System

A method of accounting used in manufacturing where costs are assigned to products based on the processes they undergo.