Question

Based on the following, calculate the pre-determined overhead rate. Summer 20 Company allocates overhead using a...

Based on the following, calculate the pre-determined overhead rate.

Summer 20 Company allocates overhead using a single plant wide rate with direct labor cost as the base.   The company manufactures two types of suitcases, Basic and Plus.

Total estimated overhead cost for the year $35,000
Estimates for the year Basic Plus
Direct Materials cost per unit $35 $42
Direct Labor cost per unit $52 $61
Number of units 530 380

35.22%

68.98%

144.97%

34.04%
Business   Accounting   
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Answer #1

Total estimated overhead cost for the year = $35,000

Total Direct Labor Cost = (52 x 530) + (61 x 380) = $50,740

Pre - determined Overhead Cost = Total estimated overhead cost for the year/Total Direct Labor Cost

                                                  = 68.98%

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