Does predetermined manufacturing overhead rate depends on production level.
DQ2_ (add inline citations)
Please define each of the following terms,
direct manufacturing item(proportional),
indirect manufacturing item (approximate promotional to the production value),
variable manufacturing overhead,
fixed manufacturing overhead (directly related to production example: rent for the factory or machineries)
and the base for pre-determined manufacturing overhead rate.
Then discuss if predetermined manufacturing overhead rate depends on production level.
Provide examples to clarify and support your argument.
Period manufacturing operations of a company requires 5,000 pounds in direct materials and 3,000 hours
of direct labor. Unit direct material cost is $100 per pound, and unit direct labor cost is $80 per hour.
Estimated overhead is $50 per each hour of direct labor. Provide the period manufacturing costs statement.
(do this in a table with the calculation)
Base = Machine Hours
Machine hours= 100 hours
So, the pre-determined variable overhead = 100X 50 = $5,000
If the machine hours are = 150
Pre- determined overhead = 150X50 =$7,500