In December 2012, Infovision established its predetermined overhead rate for movies produced...

Question:

In December 2012, Infovision established its predetermined overhead rate for movies produced during year 2013 by using the following cost predictions: overhead costs, $2,640,000, and direct labor costs, $480,000. At year end 2013, the company's records show that actual overhead costs for the year are $2,398.800. Actual direct labor cost had been assigned to jobs as follows.

Movies completed and released : $400,000

Movies still in production : $38.000

Total actual direct labor cost : $438.000

Determine the predetermined overhead rate for year 2013.

Predetermined Overhead Rate:

Predetermined Overhead Rate is the estimated overhead cost per cost driver used in the production. It is used to apply overhead cost to the products and to set selling prices even without waiting for the actual overhead costs.

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Drivers of Manufacturing Overhead Costs

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Chapter 4 / Lesson 2
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Overhead costs are those that exist outside the labor and materials in production. Explore how these costs are driven by different factors, the importance of identifying them for efficiency and safety, as well as their variance between industries.


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