Tungsten, Inc. manufactures both normal and premium tube lights. The company all

Question

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 $106,000. Additional estimated information is given below. Machine hours (MHr) Direct materials Norma Premium 27,000 50,000 $57,000 $460,000 Calculate the predetermined overhead allocation rate. (Round your answer to the nearest cent.) OA. $2.12 per machine hour B. $3.93 per direct labor hour ° C. $0.21 per direct labor hour $1.38 per machine hour D.

Explanation / Answer

Predetermined Overhead Allocation Rate = Estimated Overhead Cost / Total Machine Hours

= $ 106,000 / ( 27,000 + 50,000)

= $ 1.38 per machine hour

Hence the correct answer is D. $ 1.38 per machine hour

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