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ladessa [460]
2 years ago
5

Solid Oak Bureau Company uses job costing. Solid Oak Bureau Company has two departments, Trimming and Finishing. Manufacturing o

verhead is allocated based on direct labor cost in the Trimming Department and direct labor hours in the Finishing Department. The following additional information is available:
Estimated amounts Trimming Dept. Finishing Dept.
Direct labor cost $320,000 $400,000
Direct labor hours 25,000 40,000
Manufacturing overhead costs $416,000 $260,00


Actual amounts Trimming Dept. Finishing Dept.
Direct Material requisitioned $22,500 $52,500
Direct Labour cost $35,400 $37,100
Direct Labour hours 5400 5000

What is the predetermined manufacturing overhead rate for the Trimming Department?
a. 77% of direct labor cost
b. 107% of direct labor cost
c.130% of direct labor cost
d. 100% of direct labor cost
Business
1 answer:
Rom4ik [11]2 years ago
7 0

Answer:

c. 130% of direct labor cost

Explanation:

Note : Manufacturing overhead is allocated based on direct labor cost in the Trimming Department.

Where,

Budgeted Overheads are $416,000

Total Direct Labor Cost  are $320,000

Therefore,

Predetermined Overhead Rate = Budgeted Overheads ÷ Total Direct Labor Cost

                                                    = $416,000 ÷ $320,000

                                                    = $1.30 or 130 %      

The predetermined manufacturing overhead rate for the Trimming Department is 130 %  

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