Question

Tungsten, Inc. manufactures both normal and premium tube lights. The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base. Estimated overhead costs for the year are $ 104 comma 000. Additional estimated information is given below. Normal Premium Machine hours​ (MHr) 27 comma 000 41 comma 000 Direct materials $ 57 comma 000 $ 480 comma 000 Calculate the predetermined overhead allocation rate.​ (Round your answer to the nearest​ cent.)

Answer 1

Answer:

Estimated manufacturing overhead rate= $1.53 per machine hour

Explanation:

Giving the following information:

The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base.

The estimated overhead costs for the year are $ 104,000.

Machine hours​ (MHr)= 27,000 + 41,000= 68,000 machine hours

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 104,000/68,000= $1.53 per machine hour