The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base. Estimated overhead costs for the year are $108,000. Additional estimated information is given below.

Normal Premium

Machine hours (MHr) 29,000 48,000

Direct materials $58,000 $440,000

Calculate the predetermined overhead allocation rate. (Round your answer to the nearest cent.)

A) $3.72 per direct labor hour

B) $1.40 per machine hour

C) $2.25 per machine hour

D) $0.22 per direct labor hour

Question

Blake

Business

3 May, 09:42

The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base. Estimated overhead costs for the year are $108,000. Additional estimated information is given below.

Normal Premium

Machine hours (MHr) 29,000 48,000

Direct materials $58,000 $440,000

Calculate the predetermined overhead allocation rate. (Round your answer to the nearest cent.)

A) $3.72 per direct labor hour

B) $1.40 per machine hour

C) $2.25 per machine hour

D) $0.22 per direct labor hour

+4

Answers (1)

Know the Answer?

Barnaby · Answer 1

B) $1.40 per machine hour

Explanation:

Total machine hours = 29,000 + 48,000 = 77,000

Predetermined overhead allocation rate = Total estimated overhead costs / Total estimated quantity of the overhead allocation base

= $108,000 / 77,000 machine hours

= $1.40 per machine hour