Bella, Inc. manufactures two kinds of bagslong dashtotes 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 $ 26 comma 000. Additional estimated information is given below. Totes Satchels Direct materials cost per unit $ 32 $ 43 Direct labor cost per unit $ 53 $ 61 Number of units 520 400 Calculate the predetermined overhead allocation rate. (Round your answer to two decimal places.)

Estimated manufacturing overhead rate = $0.50 per direct labor dollar

Explanation:

Giving the following formula:

The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base.

The estimated overhead costs for the year are $26,000.

Direct labor cost per unit:

Totes = $53

Satchels = $61

Number of units:

Totes = 520

Satchels = 400

First, we need to calculate the total direct labor cost:

Total direct labor cost = 53*520 + 61*400 = $51,960

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 = 26,000/51,960 = $0.50 per direct labor dollar