Selected Information from the Budget of the Singh Corp Calculate the Predetermined Overhead Rate If the Company Uses the the Beginning

question 177

Essay

Selected information from the budget of the Singh Corp. at the beginning of the year follows:
$$\begin{array} { | l | r | } \hline \text { Estimated factory overhead } & \$ 132,000 \\\hline \text { Estimated direct labor hours } & 55,000 \text { hours } \\\hline \text { Estimated machine hours ......... } & 41,250 \text { hours } \\\hline \text { Estimated direct labor cost } & \$ 825,000 \\\hline \text { Actual factory overhead } & \\ \text { incurred during the year } &\$ 144,000 \\\hline\end{array}$$
Calculate the predetermined overhead rate if the company uses the following as a basis:
(a) Direct labor hours.
(b) Direct labor cost.
(c) Machine hours.

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Definitions:

Residual Value

Residual value is the estimated value of a fixed asset at the end of its useful life, reflecting what it can be sold for or its salvage value.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and government entities.

GAAP

Generally Accepted Accounting Principles (GAAP) are a set of rules and standards used in the United States for financial reporting, providing guidelines on how financial statements should be prepared and disclosed.

IRS

The Internal Revenue Service, a U.S. government agency responsible for tax collection and enforcement of tax laws.