Question

Marquis Company estimates that annual manufacturing overhead costs will be $904,700. Estimated annual operating activity bases are direct labor cost $415,000, direct labor hours 41,500, and machine hours 83,000. Compute the predetermined overhead rate for each activity base. (Round answers to 2 decimal places, e.g. 10.50% or 10.50.)

a. Overhead rate per direct labor cost ___ %
b. Overhead rate per direct labor hour $ ___
c. A Overhead rate per machine hour $ ___ .

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Estimated overhead= $904,700

Direct labor cost= $415,000

Direct labor hours= 41,500

Machine hours= 83,000

For each activity cost we need to use the following formula:

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

Direct labor cost:

Estimated manufacturing overhead rate= 904,700/415,000= $2.18 per direct labor dollar

Direct labor hour:

Estimated manufacturing overhead rate= 904,700/41,500= $21.8 per direct labor dollar

Machine hour:

Estimated manufacturing overhead rate= 904,700/83,000= $10.9 per machine hour