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drek231 [11]
2 years ago
12

Smith Fabricating uses job costing and applies overhead using a normal costing system and uses direct labour cost as the allocat

ion base. This period's estimated overhead cost is $100,000 and estimated direct labour cost of $50,000 and 2,500 direct labour hours. What is the overhead allocation rate?
Business
1 answer:
nalin [4]2 years ago
6 0

Answer:

Estimated manufacturing overhead rate= $40 per direct labor hour

Explanation:

Giving the following information:

This period's estimated overhead cost is $100,000 and an estimated direct labor cost of $50,000 and 2,500 direct labor hours.

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

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

Estimated manufacturing overhead rate= 100,000/2,500= $40 per direct labor hour

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