Answer:
Machine- hours:
Estimated manufacturing overhead rate= $350 per machine hour
Direct-labor hours:
Estimated manufacturing overhead rate= $233.33 per direct labor hour
Explanation:
Giving the following information:
Estimated machine hours required 16,000 hours
Estimated labor hours required 24,000 hours
Budgeted total costs in fixed overhead cost pool $5,600,000
Budgeted total production 20,000 units
We will calculate the fixed cost per unit using both machine and 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
Machine- hours:
Estimated manufacturing overhead rate= 5,600,000/16,000= $350 per machine hour
Direct-labor hours:
Estimated manufacturing overhead rate= 5,600,000/24,000= $233.33