Question

Here are selected data for Wilson​ Company: Estimated manufacturing overhead ​ $259,650 Factory utilities ​ $30,200 Estimated labor hours ​ 35,000 Indirect labor ​ $22,400 Actual direct labor hours ​ 36,000 Sales commissions ​ $53,700 Estimated direct labor cost ​ $329,600 Factory rent ​ $47,700 Actual direct labor cost ​ $320,600 Factory property taxes ​ $28,100 Factory depreciation ​ $65,400 Indirect materials ​ $33,000 If the company allocates overhead based on direct labor​ cost, what is the predetermined manufacturing overhead​ rate? A. ​81% of direct labor cost B. ​79% of direct labor cost C. ​127% of direct labor cost D. ​103% of direct labor cost

Answer 1

Predetermined manufacturing overhead rate= 78.7% per direct labor dollar

Step-by-step explanation:

To calculate the predetermined overhead rate, we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 259,650 / 329,600

Predetermined manufacturing overhead rate= 0.787

Predetermined manufacturing overhead rate= 78.7% per direct labor dollar