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(Predetermined overhead rates) Knox corp. is budgeted to spend $80,000 on manufacturing overhead in 2016. What...

(Predetermined overhead rates) Knox corp. is budgeted to spend $80,000 on manufacturing overhead in 2016. What would be the predetermined overhead rate if it based the computation on:

A. Budgeted direct labor hours of 60,000?

B. Budgeted machine hours of 160,000?

C. Budgeted direct materials costs of $480,000?

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Requirement A

Calculation of Predetermined Overhead rate

(A)

Total Estimated Manufacturing Overheads

$    80,000.00

(B)

Budgeted Direct labor Hours

60000

(A/B)

Predetermined overhead per labor hour

$               1.33

Predetermined overhead per labor hour=$1.33 per Direct labor hour

Requirement b

Calculation of Predetermined Overhead rate

(A)

Total Estimated Manufacturing Overheads

$    80,000.00

(B)

Budgeted machine hours

160000

(A/B)

Predetermined overhead per Machine hour

$               0.50

Predetermined overhead per Machine hour=$0.50 per Machine hour

Requirement c

Calculation of Predetermined Overhead rate

(A)

Total Estimated Manufacturing Overheads

$    80,000.00

(B)

Budgeted direct material cost

480000

(A/B)

Predetermined overhead as a percentage of Direct material cost

16.67%

Predetermined overhead as a percentage of Direct material cost=16.67% of Direct material cost or 17% approx

ekkarill92 answered 2 years ago
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