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Sheffield Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information.
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Sheffield Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information.

Car Truck
Estimated wheels produced 36,000 11,000
Direct labor hours per wheel 1 3

Total estimated overhead costs for the two product lines are $731,400.

Required:
Calculate overhead rate.

User Sean Carey
by
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1 Answer

3 votes

Answer:

Predetermined manufacturing overhead rate= $10.6 per direct labor hour

Step-by-step explanation:

Giving the following information:

Car Truck

Estimated wheels produced 36,000 11,000

Direct labor hours per wheel 1 3

Total estimated overhead costs for the two product lines are $731,400.

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= 731,400 / (1*36,000 + 3*11,000)

Predetermined manufacturing overhead rate= $10.6 per direct labor hour

User Alex Link
by
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