?

Managerial Accounting

Free Version

Upgrade subject to access all content

Easy

Predetermined Overhead Rate for Conveyor Systems

MGRACT-T3GFEP

A firm manufactures conveyor systems for sale to other companies. To manufacture the conveyor systems, the firm estimates it will use 600,000 direct labor hours and 525,000 machine hours. Direct labor hours represent a critical determinant for the number of conveyor systems that can be produced. Last year, the actual overhead costs were \$2,345,600. Those costs are not likely to change in the upcoming year. However, the firm will incur new training costs to re-certify all employees on the new equipment which will result in \$415,000 in additional costs.

What is the predetermined OH Rate?

A

$3.91

B

$4.47

C

$4.60

D

$5.26