Question

Rafner Manufacturing identified the following budgeted data in its two production departments. Assembly Finishing Manufacturing overhead costs . $1,200,000 $600,000 Direct labor hours 12,000 DLH 20,000 DLH Machine hours . 6,000 MH 16,000 MH 1. What is the company’s single plantwide overhead rate based on direct labor hours? 2. What is the company’s single plantwide overhead rate based on machine hours? (Round your answer to two decimal places.)

Answer 1

Results are below.

Step-by-step explanation:

Giving the following information:

Total estimated overhead= 1,200,000 + 600,000= 1,800,000

Direct labor hours= 12,000 + 20,000= 32,000

Machine hours= 6,000 + 16,000= 22,000

To calculate the predetermined 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

Based on direct labor hours:

Predetermined manufacturing overhead rate= 1,800,000/32,000

Predetermined manufacturing overhead rate= $56.25 per direct labor hour

Based on machine hours:

Predetermined manufacturing overhead rate= 1,800,000/22,000

Predetermined manufacturing overhead rate= $81.82 per machine hour