Answer:
1. $28 per direct labor hour
2. 140%
3. $35 per machine hour
Explanation:
Given that,
Total manufacturing overhead costs next year = $1,400,000
Direct labor hours used = 50,000
Direct labor cost next year = $1,000,000
Machines are expected to be run = 40,000 hours
1. Manufacturing overhead rate:
= Total manufacturing overhead cost ÷ Direct labor hours used
= $1,400,000 ÷ 50,000
= $28 per direct labor hour
2. Manufacturing overhead rate:
= (Total manufacturing overhead cost ÷ Direct labor cost) × 100
= ($1,400,000 ÷ $1,000,000) × 100
= 140%
3. Manufacturing overhead rate:
= Total manufacturing overhead cost ÷ Machine hours
= $1,400,000 ÷ 40,000
= $35 per machine hour
