Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of...
Question:
Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information.
Estimated wheels produced: Car; 40,240, Truck; 15,000.
Direct labor hours per wheel: Car; 1, Truck; 3.
Total estimated overhead costs for the two product lines are $853,560.
Calculate overhead rate. (Round answer to 2 decimal places, e.g. $12.25.)
Overhead:
Overhead cost represents indirect costs that are incurred during a production process, which include both actual costs and budgeted costs. The overhead rate measures per unit cost of overhead for a given allocation measure, which could be physical units or total direct costs.
Answer and Explanation: 1
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View this answerOverhead rate is computed as follows:
- overhead rate = total overhead cost / allocation measure
In this question, one way to construct the allocation...
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