Question

Marigold Company estimates that annual manufacturing overhead costs will be $865,920. Estimated annual operating activity bases are direct labor cost $492,000, direct labor hours 49,200, and machine hours 98,400. Compute the predetermined overhead rate for each activity base. (Round answers to 2 decimal places, e.g. 10.50% or 10.50.) Overhead rate per direct labor cost enter percentages rounded to 2 decimal places % Overhead rate per direct labor hour $enter a dollar amount rounded to 2 decimal places Overhead rate per machine hour

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Marigold Company estimates that annual manufacturing overhead costs will be $865,920. Estimated annual operating activity bases are direct labor cost $492,000, direct labor hours 49,200, and machine hours 98,400.

To calculate the estimated manufacturing overhead rate 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= 865,920/492,000= $1.76 per direct labor dollar

Direct labor hour:

Estimated manufacturing overhead rate= 865,920/49,200= $17.6 per direct labor hour

Machine-hours:

Estimated manufacturing overhead rate= 865,920/98,400=$8.8 per machine hour