Question

Bella, Inc. manufactures two kinds of bagstotes and satchels. The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are$25,750. Additional estimated information is given below. Totes Satchels Direct materials cost per unit $33 $44Direct labor cost per unit $52 $60Number of units 520 370Calculate the pre-determined overhead allocation rate.

Answer 1

Answer:

See below

Explanation:

Given that estimated overhead costs for the year = $25,750

Bagstotes:

Direct materials cost per unit = $33

Direct labor cost per unit = $52

Number of units = 520

Satchels

Direct materials cost per unit = $44

Direct labor cost per unit = $60

Number of units = 370

Estimated direct labor =

(Direct labor cost per unit × No of units) of totes + (Direct labor cost per unit × No of units) of Satchels

= ($52 × 520) + ($60 × 370)

= $27,040 + $22,200

= $29,240

Predetermine overhead allocation rate:

= Estimated overhead / Estimated direct labor × 100

= $25,750 / $29,240 × 100

= 88.06%