Answer:
A. Overhead allocation rates based on direct labour hours = $18 per direct labour hour
B. Overhead allocation based on direct labour cost = 0.6
C. Overhead allocation rates based on machine time = $40 per machine time hour
Explanation:
Here, we are interested in having some calculations done; We proceed as follows;
From the question, the total overhead = 810,000
Mathematically;
a. The overhead allocation rates based on direct labour hours = Amount of total overhead/Total direct labour hours
= 810,000/45,000 = $18 per direct labour hour
b. The overhead allocation based on direct labour cost = Amount of total overhead / Total direct labour costs
= 810,000/1,350,000 = 0.6
C. Overhead allocation based on Machine time = Amount of total overhead/total machine time hours = 810,000/20,250 = $40 per machine time hour
