Question

In planning for the upcoming year, managers of Sesame Industries estimated $532,000 in manufacturing overhead, 25,000 direct labor hours, and 100,000 machine hours (MHR). If the manager allocates overhead based on machine hours, what is the predetermined manufacturing rate for the coming year?

Answer 1

$5.32 per Machine hours

Step-by-step explanation:

Data provided:

Estimated manufacturing overhead = $532,000

Estimated direct labor hours = 25,000

Estimated machine hours (MHR) = 100,000

Now,

Since, the managers allocated the overhead based on the machine hours

therefore,

the predetermined manufacturing rate for the coming year will be

=
`\frac{\textup{Estimated manufacturing overhead}}{\textup{Estimated machine hours}}`

or

=
`(532,000)/(100,000)`

or

= $5.32 per Machine hours