If the budgeted annual manufacturing indirect cost is $2250000 and the cost allocation base is 2800 labor hour, then budgeted manufacturing overhead rate will be ___________?
Correct answer: A. $803.571 per labor hour
- A. $803.571 per labor hour
- B. $805 per labor hour
- C. $905 per labor hour
- D. $802 per labor hour
Explanation
The budgeted manufacturing overhead rate is computed as $2,250,000 ÷ 2,800 labor hours = $803.571 per labor hour. Rounding to the figures shown gives option a.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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