Question

Exercise B: Calculate and Use Overhead Rate During the coming accounting year, Ester Manufacturing, Inc., anticipates the following costs, expenses, and operating date related to Job 128: Direct material (15,000 lb.) Direct labor (@ $12 per hour) $45,000 $96,000 Indirect material $7,000 Indirect labor $12,000 Sales commissions $18,000 Factory administration $13,000 Non-factory administration expenses $14,000 Other manufacturing overhead * $28,000 *Machine hours are 30,000. Calculate the predetermined manufacturing overhead rate for the coming year for each of the following application base: a. Direct labor hours b. Direct labor costs c. Machine hours

Answer 1

A B C 1 Particulars Amount 2 Indirect material $ 7,000 3 Indirect labor $ 12,000 4 Factory administration $ 13,000 5 Other manufacturing overhead $ 28,000 6 Total estimated overhead $ 60,000 7 8 a) 9 Total estimated overhead $ 60,000 10 Direct labor hours 8000 11 Predetermined manufacturing overhead rate $ 7.5 per direct labor hour 12 13 b) 14 Total estimated overhead $ 60,000 15 Direct labor costs 96000 16 Predetermined manufacturing overhead rate 62.5% of dirrect labot cost 17 18 c) 19 Total estimated overhead $ 60,000 20 Machine hours 30000 21 Predetermined manufacturing overhead rate $ 2 per machine hour

B с A 1 Particulars Amount 2 Indirect material 7000 3 Indirect labor 12000 4 Factory administration 13000 5 Other manufacturing overhead 28000 6 Total estimated overhead =SUM(B2:B5) 7 8 a) 9 Total estimated overhead =+B6 10 Direct labor hours =96000/12 11 Predetermined manufacturing overhead rate =+B9/B10 per direct labor hour 12 13 b) 14 Total estimated overhead =+B6 15 Direct labor costs 96000 16 Predetermined manufacturing overhead rate |=+B14/B15 of dirrect labot cost 17 18 c) 19 Total estimated overhead =+B6 20 Machine hours 30000 21 Predetermined manufacturing overhead rate |=+B19/B20 per machine hour