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The following data relates to Spurrier Company's estimated amounts for next year. Estimated: Department 1 Department...

The following data relates to Spurrier Company's estimated amounts for next year.

Estimated: Department 1 Department 2
Manufacturing overhead costs $ 1,420,000 $ 3,620,000
Direct labor hours 556,000 DLH 806,000 DLH
Machine hours 106,000 MH 40,000 MH


What is the company's plantwide overhead rate if direct labor hours are the allocation base? (Round your answer to two decimal places.)

Multiple Choice

  • $3.70 per direct labor hour.

  • $3.83 per direct labor hour.

  • $2.55 per direct labor hour.

  • $0.37 per direct labor hour.

  • $0.58 per direct labor hour.

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Answer #1

The correct answer is $3.70 per direct labor hour

Note:

The plant wide overhead rate if direct labor hours are the allocation base = Total Manufacturing overhead costs + Total Direct labor hours

= ( 1,420,000 + 3,620,000 ) / ( 556,000 + 806,000)

= $ 3.70

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