Question

Question 7

Marquis Company estimates that annual manufacturing overhead costs will be $800,000. Estimated annual operating activity bases are as follows: direct labour cost $500,000, direct labour hours 50,000, and machine hours 100,000. Compute the predetermined overhead rates for each activity base.

a) The pre-determined overhead rate using Direct Labour Cost as the activity is ______ %

b) The pre-determined overhead rate using Direct Labour Hours as the activity is $ _______ per direct labour hours.

c) The pre-determined overhead rate using Machine Hours as the activity is $ _______ per machine hour.

Answer 1

a
Estimated manufacturing overhead costs	800000
Divide by Direct Labour Cost	500000
Pre-determined overhead rate	160%
b
Estimated manufacturing overhead costs	800000
Divide by Direct labour hours	50000
Pre-determined overhead rate	16.00	per direct labour hour
c
Estimated manufacturing overhead costs	800000
Divide by Machine Hours	100000
Pre-determined overhead rate	8.00	per machine hour