Question

Qminusdot Manufacturing uses a predetermined overhead allocation rate based on direct labor hours. It has provided the following information for the​ year: Manufacturing overhead costs allocated to production $ 186 comma 000 Actual direct materials cost $ 540 comma 000 Actual direct labor cost $ 2 comma 490 comma 000 Actual direct labor hours 9 comma 200 direct labor hours Estimated machine hours 180 comma 000 machine hours Based on the above​ information, calculate Qminus​dot's predetermined overhead allocation rate.​ (Round your answer to two decimal​ places.)
A. $1.03 per machine hour
B. $19.49 per direct labor hour
C. 34.26% of direct materials cost
D. 7.52% of direct labor cost

Answer 1

Answer:

A. $1.03 per machine hour

Explanation:

$\frac{Cost\: Of \:Manufacturing \:Overhead}{Cost \:Driver}= Overhead \:Rate$

the overhead rate will be calculated taking into consideration expected overhead and the expected amount of the cost driver

From the given amount the only value which also comes fro mthe budget is the machine hours which are expected to be 180,000

We cannot use actual values as these didn't occur at the time the company calcualte the overhead rae.

Using expected machine hours:

186,000 / 180,000 = 1.0333 = 1.03