Wahr Corporation Bases Its Predetermined Overhead Rate on the Estimated

question 76

Essay

Wahr 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 company estimated the labor-hours for the upcoming year at 32,000 labor-hours.The estimated variable manufacturing overhead was $7.17 per labor-hour and the estimated total fixed manufacturing overhead was $584,320.The actual labor-hours for the year turned out to be 33,300 labor-hours.
Required:
Compute the company's predetermined overhead rate for the recently completed year.

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Definitions:

Least-Squares Regression

A statistical method used to determine the best-fitting line through a set of points, minimizing the sum of the squares of the distances of the points from the line.

Statistical Evidence

Data collected and analyzed for the purpose of supporting a conclusion or hypothesis.

Step-Variable Cost

The cost of a resource that is obtained in large chunks and that increases and decreases only in response to fairly wide changes in activity.

Contribution Margin

It is the difference between the sales revenue of a product and its variable costs. The contribution margin represents the portion of sales revenue that is not consumed by variable costs.