Tungsten, Inc. manufactures both normal and premium tube lights. The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base. Estimated overhead costs for the year are $ 104 comma 000. Additional estimated information is given below. Normal Premium Machine hours (MHr) 27 comma 000 41 comma 000 Direct materials $ 57 comma 000 $ 480 comma 000 Calculate the predetermined overhead allocation rate. (Round your answer to the nearest cent.)

Question

Khloe Maxwell

Business

10 August, 10:05

Tungsten, Inc. manufactures both normal and premium tube lights. The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base. Estimated overhead costs for the year are $ 104 comma 000. Additional estimated information is given below. Normal Premium Machine hours (MHr) 27 comma 000 41 comma 000 Direct materials $ 57 comma 000 $ 480 comma 000 Calculate the predetermined overhead allocation rate. (Round your answer to the nearest cent.)

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Ricardo Bowman · Answer 1

Estimated manufacturing overhead rate = $1.53 per machine hour

Explanation:

Giving the following information:

The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base.

The estimated overhead costs for the year are $ 104,000.

Machine hours (MHr) = 27,000 + 41,000 = 68,000 machine hours

Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

Estimated manufacturing overhead rate = 104,000/68,000 = $1.53 per machine hour