WileyPlus Problem 5-5 The Hillview Company uses a budgeted factory overhead rate

Question

WileyPlus Problem 5-5 The Hillview Company uses a budgeted factory overhead rate to apply manufacturing overhead to production. The rate is based on direct labour hours. Estimates for the year 2012 are given below: Estimated manufacturing overhead 589,600 Estimated direct labour hours 53,600 During 2012 the Paine Company used 64,260 direct labour hours. At the end of 2012, the company's records revealed the following information: Raw materials inventory Work-in-process inventory Finished goods inventory Cost of goods sold Manufacturing overhead $38,820 104,960 191,810 698,430 619,870 Calculate the budgeted overhead rate for 2012. Budgeted overhead rate per DLH

Explanation / Answer

Estimated manufacturing overhead = 589600

Estimated direct labor hours = 53600

Budgeted overhead rate = Estimated manufacturing overhead/Estimated direct labor hours

= 589600/53600 = $11 per DLH

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