Question

Lancelot Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. Company Case High School Job $60,000 $2,400 $15,000 $600 Direct materials Direct labor Manufacturing overhead costs Machine-hours $50,000 100,000 mh 1,000 mh For Lancelot Manufacturing, what is the annual manufacturing overhead cost-allocation rate? Select one: O A. $0.75 O B. $1.25 OC. $50.00 O D. $0.50

Answer 1

Estimated manufacturing overhead = $50,000

Estimated machine hours = 100,000

Manufacturing cost allocate rate = Estimated manufacturing overhead / Estimated machine hours

= 50,000/100,000

= $0.50 per machine hour

Correct option is D.

Other information like direct materials and direct labor is no use while calculating manufacturing overhead cost allocation rate.

Kindly give a positive rating if you are satisfied with this solution and please ask if you have any query.

Thanks