A Company Estimates That Overhead Costs for the Next Year

question 165

Essay

A company estimates that overhead costs for the next year will be $3,600,000 for indirect labor,$200,000 for factory utilities,and $21,500 for depreciation on factory machinery.The company uses machine hours as its overhead allocation base.If 764,300 machine hours are planned for this next year,what is the company's plantwide overhead rate?

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Definitions:

Financing Activities

Transactions that result in changes in the size and composition of the equity capital or borrowings of a company.

Direct Method

A cash flow statement preparation method that itemizes actual cash receipts and payments.

Operating Expenses

Costs associated with the day-to-day functions of a business, excluding costs of production or manufacturing.

Prepaid Expenses

Payments made in advance for goods or services, which are recorded as assets until they are actually used.