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Steering Company estimated the following annual hours and costs: Expected annual direct labor hours 40,000 Expected...

Steering Company estimated the following annual hours and costs:

Expected annual direct labor hours 40,000
Expected annual direct labor cost $1,400,000
Expected machine hours 40,000
Expected material cost for the year $1,792,000
Expected manufacturing overhead $2,240,000

(a)

Calculate predetermined overhead allocation rates using each of the four possible allocation bases provided. (Round direct labor cost and direct material cost answers to 2 decimal places, e.g. 15.25 and all other answers to 0 decimal places, e.g. 5,275.)

Direct labor hours

Direct labor cost

Machine hours

Direct material cost

Predetermined overhead allocation

 $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 2 decimal places

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Expert Solution

Direct labor hours:

Pedetermined overhead allocation rate = Estimated manufacturing overhead / Estimated direct labor hours

Pedetermined overhead allocation rate = $2,240,000 / 40,000 = $56 per DLH

Direct labor cost :

Pedetermined overhead allocation rate = Estimated manufacturing overhead / Estimated direct labor costs

Pedetermined overhead allocation rate = $2,240,000 / $1,400,000 = $1.6 per Direct labor cost

Machine hours:

Pedetermined overhead allocation rate = Estimated manufacturing overhead / Estimated machine hours

Pedetermined overhead allocation rate = $2,240,000 / 40,000 = $56 per MH

Material costs:

Pedetermined overhead allocation rate = Estimated manufacturing overhead / Estimated material costs

Pedetermined overhead allocation rate = $2,240,000 / $1,792,000 = $1.25 per Material costs

ekkarill92 answered 2 years ago
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