## Lead Company's Estimated Amounts for Next YearThe following data relates to Lead Company's estimated amounts for next year:| Estimated: | Department 1 | Department 2 ||---------------------------------|------------------|----------------------|| Manufacturing overhead costs | $1,688,000 | $3,512,000 || Direct hours | 710,000 DLH | 930,000 DLH || Machine hours | 106,000 MH | 38,000 MH |### Question:What is the company's plantwide overhead rate if direct labor hours are the allocation base?(Round to two decimal places)### Options:- $3.17 per direct labor hour.- $2.38 per direct labor hour.- $2.069 per direct labor hour.- $3.63 per direct labor hour.### Explanation:To determine the plantwide overhead rate, use the following formula:\[ \text{Plantwide Overhead Rate} = \frac{\text{Total Estimated Manufacturing Overhead Costs}}{\text{Total Estimated Direct Labor Hours}} \]The Total Estimated Manufacturing Overhead Costs is the sum of the overhead costs for Department 1 and Department 2:\[ \$1,688,000 + \$3,512,000 = \$5,200,000 \]The Total Estimated Direct Labor Hours is the sum of the direct labor hours for Department 1 and Department 2:\[ 710,000 \, \text{DLH} + 930,000 \, \text{DLH} = 1,640,000 \, \text{DLH} \]Thus, the Plantwide Overhead Rate is calculated as follows:\[ \frac{\$5,200,000}{1,640,000 \, \text{DLH}} = \$3.17 \, \text{per} \, \text{DLH} \]Therefore, the correct answer is:\[ \boxed{3.17 \, \text{per direct labor hour}} \]

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Description: ## Lead Company's Estimated Amounts for Next YearThe following data relates to Lead Company's estimated amounts for next year:| Estimated: | Department 1 | Department 2 ||---------------------------------|----------

Plant -wide overhead rate: Manufacturing overhead is all the costs in a manufacturing plant that…

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The following data relates to Lead Company's estimated amounts for next year. Department 1 Department 2 Estimated: Manufacturing overhead $1,688,000 $3,512,000 costs Direct hours 710,000 DLH 930,000 DLH Machine hours 106,000 MH 38,000 MH What is the company's plantwide overhead rate if direct labor hours are the allocatic base? (Round to two decimal places)

The following data relates to Lead Company's estimated amounts for next year. Department 1 Department 2 Estimated: Manufacturing overhead $1,688,000 $3,512,000 costs Direct hours 710,000 DLH 930,000 DLH Machine hours 106,000 MH 38,000 MH What is the company's plantwide overhead rate if direct labor hours are the allocatic base? (Round to two decimal places)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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