Cranston Company Estimates the Following Overhead Costs for the Coming

question 35

Essay

Cranston Company estimates the following overhead costs for the coming year: 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.

• 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.

---

Definitions:

Tender Offer

A tender offer is a public, open offer or invitation (usually made by a company or investor) to all shareholders of a publicly traded corporation to tender their stock for sale at a specific price during a certain time period.

Shareholders

Individuals or entities that own shares in a corporation, giving them ownership interests and rights such as receiving dividends and voting at shareholder meetings.

Premium

An amount paid for an insurance policy or added to the regular price of something.

Diversification

The strategy of spreading investments across various financial instruments, industries, or other categories to reduce risk.