Roget Factory has budgeted factory overhead for the year at $4,992,000. It plans to produce 2,000,000 units of product. Budgeted direct labor hours are 480,000, and budgeted machine hours are 750,000. Using a single plantwide factory overhead rate based on direct labor hours, the factory overhead rate for the year is

Question

Josue Logan

Business

20 May, 11:12

Roget Factory has budgeted factory overhead for the year at $4,992,000. It plans to produce 2,000,000 units of product. Budgeted direct labor hours are 480,000, and budgeted machine hours are 750,000. Using a single plantwide factory overhead rate based on direct labor hours, the factory overhead rate for the year is

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Answers (1)

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Drew Stanton · Answer 1

Estimated manufacturing overhead rate = $10.4 per direct labor hour.

Explanation:

Giving the following information:

Roget Factory has budgeted factory overhead for the year at $4,992,000.

Budgeted direct labor hours are 480,000.

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 = 4,992,000/480,000

Estimated manufacturing overhead rate = $10.4 per direct labor hour.