Question

Marquis Company estimates that annual manufacturing overhead costs will be $822,600. Estimated annual operating activity bases are direct labor cost $457,000, direct labor hours 45,700, and machine hours 91,400.

Compute the predetermined overhead rate for each activity base. (Round answers to 2 decimal places, e.g. 10.50% or 10.50.)

Overhead rate per direct labor cost
Overhead rate per direct labor hour
Overhead rate per machine hour

Answer 1

Answer:

Computation of the predetermined overhead rate for each activity base:

Overhead rate per direct labor cost	180.00%
Overhead rate per direct labor hour	$18.00
Overhead rate per machine hour	$9.00

Based on direct labour cost:

Overhead rate per direct labor cost = (Budeted overhead costs / Budgeted direct labor cost) x 100

= ($822,600 / $457,000) x 100

= 180.00%

Based on direct labor hours:

Overhead rate per direct labor hours = Budgeted overhead costs / budgeted direct labor hours

= $822,600 / 45,700

= $18.00 per direct labor hour

Based on machine hours:

Overhead rate per machine hours = Budgeted overhead costs / Budeted machine hours

= $822,600 / 91,400

= $9.00 per machine hour