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Marquis Company estimates that annual manufacturing overhead costs will be $869,440. Estimated annual operating activity bases are direct labor cost $494,000, direct labor hours 49,400, and machine hours 98,800. Compute the predetermined overhead rate for each activity base. Show work. Show work

Answer :

TomShelby

Answer:

If direct labor hours:   $ 17.6

If direct labor cost:     $   1.76

If machine hours:        $  8.8

Explanation:

[tex]\frac{Cost\: Of \:Manufacturing \:Overhead}{Cost \:Driver}= Overhead \:Rate[/tex]

The company's overhead rate will be the quotient between the expect overhead cost and the choose cost driver.

If direct labor hours:

869,440 / 49,400 = 17.6

For every hour of labor 17.6 dollar of overhead are generated

If direct labor cost:

869,440 / 494,000 = 1.76

each dollar paid in wages also means there is 1.76 dollar of overhead cost

If machine hours

869,440 / 98,800 = 8.8

each hours the mahcines are on there is 8.80 dollar of overhead cost.

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