Question

All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000. The Ramapo Company uses a single overhead rate to apply all overhead costs. What would the single plantwide rate be if it was based on machine hours instead of labor hours

Answer 1

Results are below.

Step-by-step explanation:

We weren't provided with the number of machine-hours. To guide an answer, I will assume that 35,000 machine hours were estimated in the Fabrication Department.

To calculate the predetermined manufacturing 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= 84,000 / 35,000

Predetermined manufacturing overhead rate= $2.4 per machine hour