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Compute the overhead rate for past years and next year
Course:- Cost Accounting
Reference No.:- EM13890393




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The overhead costs that Sife Industries, Inc., used to compute its overhead rate for the past year are as follows.

Indirect materials and supplies, repair and maintenance,

Outside service contracts, indirect labor, factory supervision, factory insurance, heat, light, and power costs

$222,000

Property taxes and miscellaneous overhead costs

13,000

Depreciation, machinery

85,000

Total overhead costs

$320,000

The allocation base for the past year was 40,000 total machine hours. For the next year, all overhead costs except depreciation, property taxes, and miscellaneous overhead are expected to increase by 10 percent. Depreciation should increase by 12 percent, and property taxes and miscellaneous overhead are expected to increase by 20 percent. Plant capacity in terms of machine hours used will increase by 10,000 hours.

1. Compute the past year's overhead rate.

2. Compute the overhead rate for next year.




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