Answer:
Results are below.
Explanation:
Giving the following information:
Estimated manufacturing overhead= $10 million.
Client 1 Client 2
Machine-hours (thousands) 2,000 2,000
Direct labor cost ($000) $2,500 $7,500
<u>To calculate the predetermined overhead rate, we need to use the following formula:</u>
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Machine hours:
Predetermined manufacturing overhead rate= 10,000,000 / 4,000
Predetermined manufacturing overhead rate= $2,500 per machine hour
Direct labor:
Predetermined manufacturing overhead rate= 10,000,000 / 10,000
Predetermined manufacturing overhead rate= $1,000 per direct labor dollar
