Question

The company XOXO is specialized in producing treadmills. The company allocates manufacturing overhead based on direct labor hours. XOXO estimated a total of $4,600 of manufacturing overhead that can be dispatched on all jobs. Moreover, the total direct labor hours that has been recorder during the period raises up to 460 hours. Job 12 consists of 30 sets of treadmills. The company’s records show that the following direct costs were requisitioned for Job 12: • Electronic parts: 40 units at $20 per unit • Plastic: 10 kilograms at $10 per kilogram • Labor hours: 60 hours at $25 per hour Requirement: 1. Calculate the predetermined manufacturing overhead (MOH) rate.

Answer 1

Predetermined manufacturing overhead rate= $10 per direct labor hour

Step-by-step explanation:

Giving the following information:

The company allocates manufacturing overhead based on direct labor hours.

Estimated a total overhead= $4,600

Direct labor hours= 460

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= 4,600/460= $10 per direct labor hour