Question

Req 2: First, fill in the missing costs. Then, calculate the company's predetermined manufacturing overhead rate, assuming the company uses direct labor hours as its allocation base. Estimated total Type of Cost Selling and Administrative salaries and expenses cost for the year 210,000 Direct Labor (Estimated 40,000 DL hours @ average wage rate of $11 per hour) Indirect plant labor Plant utilities 60,000 70,000 1,500,000 120,000 30,000 Purchases of direct materials Lease and property taxes on the plant 2$ Marketing expenses Depreciation on production equipment (equipment originally costing $700,000 three year ago is being depreciated over a 5 year useful life using straight-line depreciation. No salvage value is expected.) Indirect materials to be used in the plant 2$ 20,000 Predetermined Overhead Rate = per direct labor hour

Answer 1

Manufacturing Overhead & Predetermined overhead rate:- Particulars Amount $ Indirect plant labor 60,000 Plant utilities 70,000 Lease and property taxes on the plant 120,000 Depreciation on Production equipment (700000-0)/5 140,000 Total Manufacturing overhead (A) 390,000 Estimated direct labor hours (B) 40,000 Predetermined overhead rate per direct labor hour (A/B) 9.75