Estimated Overhead Cost Compute the company\'s predetermined overhead rate, assu

Question

Estimated
Overhead Cost

Compute the company's predetermined overhead rate, assuming that the company uses a single plantwide predetermined overhead rate based on direct labor-hours. (Round your answer to 2 decimal places.)

Activity Cost Pool      

Estimated
Overhead Cost

Expected Activity Labor-related $ 57,000 7,800 direct labor-hours Machine-related $ 14,800 22,125 machine-hours Machine setups $ 44,000 600 setups Production orders $ 18,000 500 orders Product testing $ 43,000 2,100 tests Packaging $ 75,125 5,300 packages General factory $ 108,125 7,800 direct labor-hours

Explanation / Answer

1.

Computations of activity-based overhead rates: Activity Cost Pool Estimated Overhead/ Expected use of Activity-Based Cost drivers = Overhead Rates Labor related 48,000 20,000 $2.40 per direct labor hour Machine related 67,500 45,000 $1.50 per machine hour Machine setups 84,000 600 $140 per set up Production orders 112,000 400 $280 per order Product testing 58,500 900 $65 per test Packaging 90,000 6,000 $15 per package General factory 672,000 20,000 $33.6 direct labor hour

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