Question

# Marquis Company estimates that annual manufacturing overhead costs will be \$822,600. Estimated annual operating activity bases...

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.)

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

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