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Calculate the firm predetermined and actual overhead rates

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Reference no: EM132536758

The following data relate to Denyer Ltd for the year just ended:

Budgeted sales revenue                            $307 500

Actual manufacturing overhead                 $510 000

Budgeted machine hours                           15 000

Budgeted direct labour hours                        30 000

Budgeted direct labour rate                            $ 21

Budgeted manufacturing overhead               $546 000

Actual machine hours                                  16 500

Actual direct labour hours                            27 000

Actual direct labour rate                              $ 22.50

Required:

Question a. Calculate the firm's predetermined and actual overhead rates for the year using each of the following cost drivers:

I. machine hours

II. direct labour hours

III. direct labour cost.

Question b. Would you recommend using an actual overhead rate or a predetermined overhead rate for Denyer Ltd? Explain your answer

Reference no: EM132536758

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