Question

Bella, Inc. manufactures two kinds of bagslong dashtotes and satchels. The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are $ 26 comma 000. Additional estimated information is given below. Totes Satchels Direct materials cost per unit $ 32 $ 43 Direct labor cost per unit $ 53 $ 61 Number of units 520 400 Calculate the predetermined overhead allocation rate.​ (Round your answer to two decimal​ places.)

Answer 1

Answer:

Estimated manufacturing overhead rate= $0.50 per direct labor dollar

Explanation:

Giving the following formula:

The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base.

The estimated overhead costs for the year are $26,000.

Direct labor cost per unit:

Totes= $53

Satchels= $61

Number of units:

Totes= 520

Satchels= 400

First, we need to calculate the total direct labor cost:

Total direct labor cost= 53*520 + 61*400= $51,960

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 26,000/51,960= $0.50 per direct labor dollar