Question

West Company estimates that overhead costs for the next year will be $3,600,000 for indirect labor and $820,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 130,000 machine hours are planned for this next year, what is the company's plantwide overhead rate?

Answer 1

Answer:

$ 34

Explanation:

Overhead cost $3,600,000

Factory utilities $820,000

Machine hours $130,000

Overhead cost + Factory utilities/ Machine hours

($3,600,000 + $820,000) = $4,420,000

$4,420,000 /130,000 = $34

direct labor hours per hour= $34

The company overhead rate is $34