Since the company is more reliant on labor than machines, Maria decides to use direct labor hours (DLH) as the activity base for her predetermined factory overhead rate, rather than machine hours (MH).Estimated Selected Amounts for the YearEstimated depreciation on equipment$1,200.00Estimated total Office Manager/Knitting Supervisor wages$36,000.00Estimated office utilities$3,000.00Estimated factory utilities$4,800.00Estimated factory rent$24,000.00 Activity Base Data Estimated number of DLH for the year5,000Estimated number of MH for the year3,500 Compute the predetermined factory overhead rate for the current year. If required, round your answers to the nearest cent.

Overheads are considered as fixed and common expenses that should be allocated to the products on the basis of different methods. Activity level allocation is one of the best methods for allocation.Predetermined factory overhead rate is = Estimated total overhead / Estimated direct labor hours Estimated total overhead = 1,200 + 36,000 + 3,000 + 4,800 + 24,000 = 69,000 Direct labor hour = 5,000 Predetermined factory overhead rate is = 69,000 / 5,000 = 13.80 So the correct answer is $ 13.8 per labour hour.

Answered: Since the company is more reliant on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Since the company is more reliant on labor than machines, Maria decides to use direct labor hours (DLH) as the activity base for her predetermined factory overhead rate, rather than machine hours (MH).

Estimated Selected Amounts for the Year
Estimated depreciation on equipment	$1,200.00
Estimated total Office Manager/Knitting Supervisor wages	$36,000.00
Estimated office utilities	$3,000.00
Estimated factory utilities	$4,800.00
Estimated factory rent	$24,000.00

Activity Base Data
Estimated number of DLH for the year	5,000
Estimated number of MH for the year	3,500

Compute the predetermined factory overhead rate for the current year. If required, round your answers to the nearest cent.

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