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Managerial Accounting

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Predetermined Overhead Rate for Aircrafts

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Boeing Corp manufactures aircrafts. To manufacture the aircraft, the firm estimates it will use 900,000 direct labor hours. Last year, the actual overhead costs were \$8,760,000. Those costs are not likely to change in the upcoming year. However, new regulatory standards require that aircraft systems be updated resulting in \$750,000 in additional costs.

What is the predetermined OH Rate?

A

$10.57

B

$9.73

C

$11.44

D

$8.90