Question

Weekly Company gathered the following information for the year ended December​ 31:Direct labor cost incurred for the year$ 180 comma 700Estimated manufacturing overhead costs$ 274 comma 300Estimated direct labor cost $ 219 comma 800Work in process​ inventory, Dec, 31$ 51 comma 700Finished goods​ inventory, Dec. 31$ 66 comma 000Cost of goods sold$ 141 comma 300Estimated direct labor hours 260 comma 500What would the predetermined manufacturing overhead rate for the year be using direct labor cost as the allocation​ base?

Answer 1

predetermined manufacturing overhead rate $1.23

Step-by-step explanation:

`(Cost\: Of \:Manufacturing \:Overhead)/(Cost \:Driver)= Overhead \:Rate`

We will distribute the expected overhead cost along a cost driver.

In this case we are asked to use direct labor cost:

estimated overhead 270,300

estimated labor 219,800

overhead rate = 270,300 / 219,800 = 1,229754 = 1.23