Question

Bella, Inc. manufactures two kinds of bagslong dash—totes and satchels. The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are $ 25 comma 000$25,000. Additional estimated information is given below. Totes Satchels Direct materials cost per unit $ 35$35 $ 44$44 Direct labor cost per unit $ 52$52 $ 65$65 Number of units 500500 360360 Calculate the predetermined overhead allocation rate.​ (Round your answer to two decimal​ places.)

Answer 1

Answer:

$0.51

Explanation:

The computation of the predetermined overhead rate. The formula is shown below:

Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated direct labor-hours)

where,

Estimated overhead costs for the year is $25,000

And, the estimated direct labor cost would be

For Totes

= $52 × 500 units

= $26,000

For Satchels

= $65 × 360 units

= $23,400

So, the total direct labor cost would be

= $26,000 + $23,400

= $49,400

Now put these values to the above formula  

So, the value would equal to

= $25,000 ÷ 49,400

= $0.51