Question

Custom Engines Company has the following estimated costs for the upcoming year: Direct labor costs $62,300 Direct materials used $25,600 Salary of factory supervisor $37,900 Sales commissions $8900 Heating and lighting costs for factory $22,500 Depreciation on factory equipment $5100 Advertising expense $33,100The company estimates that 2000 direct labor hours will be worked in the upcoming year, while 2200 machine hours will be used during the year. The predetermined manufacturing overhead rate per machine hour is closest to (Round your answer to the nearest whole dollar.)

Answer 1

Answer:

Estimated manufacturing overhead rate= $30 per machine hour

Explanation:

Giving the following information:

Salary of factory supervisor $37,900

Heating and lighting costs for factory $22,500

Depreciation on factory equipment $5100

Total estimated manufacturing overhead= $65,500

Total amount of allocation base= 2200 machine hours.

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base= 65500/2200= 29.77