Question Completion:
Estimated manufacturing overhead costs = $156,000
Estimated direct labor cost = $390,000
Estimated direct materials cost = $350,000
Answer:
Pajama Corp.
The cost driver rate = $0.40 per DL cost.
Explanation:
a) Data and Calculations:
Estimated manufacturing overhead costs = $156,000
Estimated direct labor cost = $390,000
Estimated direct materials cost = $350,000
Cost driver rate = $0.40 ($156,000/$390,000)
b) To calculate the cost driver rate, Pajamas Corp. divides the total estimated manufacturing overhead costs by the cost driver (direct labor cost). This implies that the cost driver rate is the total cost of activity pool divided by its cost driver. This yields the amount of overhead and indirect costs related to a particular activity.
