Question

Bluebell Manufacturing bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 1,726 direct labor-hours will be required in March. The variable overhead rate is $10.5 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $17,538.7 per month, which includes depreciation of $2,600. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for March should be: Select one: a. $16 b. $8 c. $18,131 d. $365,873

Answer 1

Correct answer----------$20.66

None of the answers in the options are correct.

I am assuming the options are either incorrect or the options are for another question.

The correct predetermined overhead rate is $20.66 per labor hour calculated as follows

A	Estimated Manufacturing Overheads	$    17,538.70
B	Estimated Labor Hours	1726
C=A/B	Overheads for fixed overheads	$            10.16
D	Variable overhead rate	$ 10.50
E=D+C	Predetermined overhead rate	$ 20.66