Luzadis Company makes furniture using the latest automated technology. The company uses a… 1 answer below »
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Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year:
Machine-hours83,000 Fixed manufacturing overhead cost$1,273,000 Variable manufacturing overhead per computer-hour$3.70
During the year, a glut of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year:
Machine-hours40,000 Manufacturing overhead cost$815,000
Required:1.
Compute the company’s predetermined overhead rate for the year
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