Ramos Corporation Bases Its Predetermined Overhead Rate on the Estimated

question 11

Essay

Ramos Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year.Data for the most recently completed year appear below:
$\begin{array}{|c|r|l|}\hline \begin{array}{l}\text { Estimates made at the beginning of } \\\text { the year: }\end{array} & & \\\hline \text { Estimated labor-hours } & 24,000 & \\\hline \begin{array}{l}\text { Estimated variable } \\\text { manufacturing owerhead }\end{array} & \$ 6.86 & \begin{array}{l}\text { per labor- } \\\text { hour }\end{array} \\\begin{array}{c}\text { Estimated total fteed } \\\text { manufacturing owerhead }\end{array} & \$ 394,560 & \\\hline \text { Actual labor-hours tor the year } & 24,500 & \\\hline\end{array}$
Required:
Compute the company's predetermined overhead rate for the recently completed year.

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Definitions:

Consumption Possibilities

The range of goods and services that can be consumed given a consumer's income and prices.

Physical Capital

Tangible assets used in the production of goods and services, such as machinery, buildings, and equipment.

Production Possibilities Curve

A graph that shows the different quantities of two goods that an economy can produce using all of its resources efficiently.

Scarcity

Fundamental concept of economics that indicates that there is less of a good freely available than people would like.