Question

The Equinox Fabrication Plant suffered a fire incident in​ August, and most of the records for the year were destroyed. The following accounting data for the year were​ recovered: Total manufacturing overhead estimated at the beginning of the year Total direct labor costs estimated at the beginning of the year Total direct labor hours estimated at the beginning of the year direct labor hours Actual manufacturing overhead costs for the year Actual direct labor costs for the year Actual direct labor hours for the year direct labor hours The company bases its manufacturing overhead allocation on the number of direct labor hours. What was the predetermined overhead allocation rate for the​ year? (Round your answer to the nearest​ cent.

Answer 1

The predetermined overhead allocation rate for the​ year is $29.40

The predetermined overhead allocation rate is referred to as the allocation rate that is used in the application of the estimated cost of manufacturing overhead to the job orders or products.

From the complete question, the predetermined overhead allocation rate will be calculated thus:

= Estimated manufacturing overhead / Estimated direct labor hours

= $105840 / 3600

= $29.40

Therefore, the predetermined overhead allocation rate is $29.40.

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