Question

Rafner Manufacturing identified the following budgeted data in its two production departments. Assembly Finishing Manufacturing overhead costs $ 1,112,500 $ 500,000 Direct labor hours 11,000 DLH 19,000 DLH Machine hours 5,000 MH 15,000 MH
Required: 1. What is the company's single plantwide overhead rate based on direct labor hours? 2. What is the company's single plantwide overhead rate based on machine hours?

Answer 1

Answer:

DL rate:  $  53.75

MH rate: $  80.625‬

Explanation:

$\frac{Cost\: Of \:Manufacturing \:Overhead}{Cost \:Driver}= Overhead \:Rate$

we haveto divide the expected overhead cost over the cost driver chose:

1,112,500 + 500,000 = 1,612,500 total overhead cost

11,000 + 19,000 = 30,000 direct labor hours

5,000 + 15,000 = 20,000 machien hours

DL rate: 1,612,500 / 30,000 =  53.75

MH rate: 1,612,500 / 20,000 =  80.625‬

Answer 2

Answer:

1. $53.75 per direct labor hour

2. $80.625 per machine hour

Explanation:

Total manufacturing overhead costs= $1112500+$500000  = $1612500

Total direct labor hours= 11000+19000=30000

Total machine hours= 5000+15000=20000

1.       Company’s single plantwide overhead rate based on direct labor hours

= Estimated overhead costs/Estimated direct labor hours

=$1612500/30000 =$53.75 per direct labor hour

2.       Company’s single plantwide overhead rate based on machine hours

= Estimated overhead costs/Estimated Machine hours

=$1612500/20000 =$80.625 per machine hour