Question

X Company estimates that direct labor hours for the year will be 1,400, and machines will be operated for 65,000 hours. If overhead is allocated on the basis of machine hours, what will the 2020 overhead rate be

X Company has the following estimated costs for 2020: Direct materials Direct labor Factory supplies Factory supervision Advertising Factory rent Sales salaries Factory insurance $59,600 22,400 18,600 29,800 41,300 47,200 50,000 66,300 X Company estimates that direct labor hours for the year will be 1,400, and machines will be operated for 65,000 hours. If overhead is allocated on the basis of machine hours, what will the 2020 overhead rate be?

Answer 1

--Requirement

	Factory Supplies	$18,600
	Factory Supervision	$29,800
	Factory Rent	$47,200
	Factory Insurance	$66,300
A	Total Overheads	$161,900
B	Total expected machine hours	65,000
C = A/B	Overhead rate would be	$2.49	Answer