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fomenos
3 years ago
7

Smith Office Equipment Company's budgeted manufacturing overhead is $5,400,000. Overhead is allocated on the basis of direct lab

or hours. The budgeted direct labor hours for the period are 30,000. What is the manufacturing overhead rate?
Business
1 answer:
Alexandra [31]3 years ago
8 0

Answer:

$180 per direct labor hour

Explanation:

Manufacturing overhead rate is calculated by dividing the budgeted overhead by the budgeted level of activity on which the overhead is applied. It is a rate at which the overhead is applied to a product / project/ department.

Manufacturing overhead rate = Budgeted overhead / Budgeted activity

Manufacturing overhead rate = Budgeted overhead / Budgeted direct labor hours

Manufacturing overhead rate = $5,400,000 / 30,000

Manufacturing overhead rate  = $180 per direct labor hour

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