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16 September, 15:39

The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base. Estimated overhead costs for the year are $108,000. Additional estimated information is given below.

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Machine hours (MHr) 29,000 48,000

Direct materials $58,000 $440,000

Calculate the predetermined overhead allocation rate. (Round your answer to the nearest cent.)

A) $3.72 per direct labor hour

B) $1.40 per machine hour

C) $2.25 per machine hour

D) $0.22 per direct labor hour

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  1. 16 September, 19:30
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    B) $1.40 per machine hour

    Explanation:

    Total machine hours = 29,000 + 48,000 = 77,000

    Predetermined overhead allocation rate = Total estimated overhead costs / Total estimated quantity of the overhead allocation base

    = $108,000 / 77,000 machine hours

    = $1.40 per machine hour
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