Question

Homework: Ch 3 HW Score: 0 of 1 pt S3-6 (book/static) Save 2 of 13 (7 complete) HW Score: 46.73%, 7.48 of 16 pts Question Help Edmonton Pools manufactures swimming pool equipment. Edmonton estimates total manufacturing overhead costs next year to be $1,400,000. Edmonton also estimates it will use 50,000 direct labor hours and incur $1,000,000 of direct labor cost next year. In addition, the machines are expected to be run for 40,000 hours. Compute the predetermined manufacturing overhead rate for next year under the following independent situations 1. Assume that the company uses direct labor hours as its manufacturing overhead allocation base 2. Assume that the company uses direct labor cost as its manufacturing overhead allocation base 3. Assume that the company uses machine hours as its manufacturing overhead allocation base 1. Compute the predetermined manufacturing overhead rate for next year assuming that the company uses direct labor hours as its manufacturing overhead allocation base. ldentify the formula and compute the predetermined manufacturing overhead rate for next year using direct labor hours as the manufacturing overhead allocation base Predetermined manufacturing overhead rate per DL hour

Answer 1

1.

total manufacturing overhead costs	/ direct labor hours	= predetermined manufacturing overhead rate
1,400,000	/ 50,000	$28 per DL hour

2.

total manufacturing overhead costs	/ total direct labor cost	= predetermined manufacturing overhead rate
1,400,000	/ 1,000,000	=$1.40 per dollar of DL

3.

total manufacturing overhead costs	/ total machine hours	= predetermined manufacturing overhead rate
1,400,000	/ 40,000	= $35 per Machine hour