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2 years ago

Exercise 4-36 (Algo) Application of Overhead [LO 4-4, 4-6]

Business

1 answer:

vesna_86 [32]2 years ago

7 0

1. The predetermined overhead rate is <u>$28 per professional hour</u>.

2. Norton will send Central Texas Bank the total amount of the bill of <u>$472,750</u>.

<h3>What is the predetermined overhead rate?</h3>

The predetermined overhead rate is the quotient of the estimated overhead costs divided by the estimated cost driver units.

The estimated cost driver units are the allocation base for the overhead.

The predetermined overhead rate allocates manufacturing overhead costs to cost objects (product or service units).

<h3>Data and Calculations:</h3>

Estimated overhead costs = $616,000

Estimated professional hours for the year = 22,000

Predetermined overhead rate = $28 ($616,000/22,000)

<h3>Total Billing:</h3>

Direct materials $ 48,000

Direct professional hours ($55/hour) 1,700 = $93,500 (1,700 x $55)

Overhead = $47,600 (2,700 x $28)

Total cost = $189,100

Markup =283,650 ($189,100 x 1.5)

Total billing = $472,750

Thus, the total amount that Norton will send Central Texas bank is <u>$472,750</u>.

Learn more about the predetermined overhead rate at brainly.com/question/26372929

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