Question

Everlast Co. manufactures a variety of drill bits. The company's plant is partially automated. The budget for the year includes $612,000 payroll for 7,400 direct labor-hours. Listed below is cost driver information used in the product-costing system: Overhead Cost Pool Budgeted Overhead Cost Driver Estimated Cost Driver Level Machine setups $ 1,289,450 # of setups 270 setups Materials handling 113,400 # of barrels 9,450 barrels Quality control 1,014,000 # of inspections 2,600 inspections Other overhead cost 819,000 # of machine hours 19,500 machine hours Total overhead $ 3,235,850 A current product order has the following requirements: Machine setups 24 setups Materials handling 696 barrels Quality inspections 88 inspections Machine hours 1,500 machine hours Direct labor hour 516 hours What is the total manufacturing overhead for the current product order if the firm uses a plantwide rate based on direct labor-hours? (Round your intermediate calculation to 2 decimal places.) Multiple Choice $9,760. $42,675. $92,070.

Answer 1

Answer:

Plantwide overhead rate = $612,000 / 7,400 = $82.7027

Total manufacturing overhead for the current product order = 516 direct labor hours * plantwide overhead rate

= 516 * $82.7027 = $42,675