Question

Factory Overhead Rate, Entry for Applying Factory Overhead, and Factory Overhead Account Balance The cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning February 1 would be $3,150,000, and total direct labor costs would be $1,800,000. During February, the actual direct labor cost totaled $160,000, and factory overhead cost incurred totaled $283,900. a. What is the predetermined factory overhead rate based on direct labor cost? Enter your answer as a whole percent not in decimals.

Answer 1

Answer:

Estimated manufacturing overhead rate= $1.75 per direct labor dollar

Explanation:

Giving the following information:

The estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning February 1 would be $3,150,000, and total direct labor costs would be $1,800,000.

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= 3,150,000/1,800,000= $1.75 per direct labor dollar