Question

Adirondack Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. Overhead Total Direct Labor Hours DLH per Product A B Painting Dept. $241,200 11,300 2 11 Finishing Dept. 60,900 11,800 3 3 Totals $302,100 23,100 5 14 The single plantwide factory overhead rate for Adirondack Marketing Inc. is

Answer 1

Answer:

Predetermined manufacturing overhead rate= $17,115.80

Explanation:

Giving the following information:

Overhead Total Direct Labor Hours DLH per Product A B

Painting Dept. $241,200 11,300 2 11

Finishing Dept. 60,900 11,800 3 3

Totals $302,100 23,100 5 14

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

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

Total direct labor hours= 5 + 14= 19

Total overhead= 302,100 + 23,100= $325,200

Predetermined manufacturing overhead rate= 325,200/19

Predetermined manufacturing overhead rate= $17,115.80