Question

Marquis Company estimates that annual manufacturing overhead costs will be $869,440. Estimated annual operating activity bases are direct labor cost $494,000, direct labor hours 49,400, and machine hours 98,800. Compute the predetermined overhead rate for each activity base. Show work. Show work

Answer 1

If direct labor hours: $ 17.6

If direct labor cost: $ 1.76

If machine hours: $ 8.8

Step-by-step explanation:

`(Cost\: Of \:Manufacturing \:Overhead)/(Cost \:Driver)= Overhead \:Rate`

The company's overhead rate will be the quotient between the expect overhead cost and the choose cost driver.

If direct labor hours:

869,440 / 49,400 = 17.6

For every hour of labor 17.6 dollar of overhead are generated

If direct labor cost:

869,440 / 494,000 = 1.76

each dollar paid in wages also means there is 1.76 dollar of overhead cost

If machine hours

869,440 / 98,800 = 8.8

each hours the mahcines are on there is 8.80 dollar of overhead cost.