Answer:
The correct answer is D.
Explanation:
Giving the following information:
Next year's overhead is estimated to be $338,250.
Direct labor costs $28 per hour and the company expects to manufacture 22,000 units of CC1 and 91,000 units of CC2 next year.
CC1: Direct Labor Dollars Per Unit $22.40
CC2: Direct Labor Dollars Per Unit $15.40
First, we need to calculate the number of direct labor hours required:
CC1= 22.4/28= 0.8 direct labor hours per unit
CC2= 15.4/28= 0.55 direct labor hours per unit
CC1= 22,000 units* 0.8= 17,600 hours
CC2= 91,000* 0.55= 50,050 hours
Total= 67,650 hours
To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 338,250/ 67,650= %5 per direct labor hour
