In: Accounting
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Calculate and Use Overhead Rate
During the coming accounting year, Baker Manufacturing, Inc., anticipates the following costs, expenses, and operating data:
Direct material (16,000 lb.) |
$ 80,000 |
Direct labor (@ $10/hr.) |
140,000 |
Indirect material |
12,000 |
Indirect labor |
22,000 |
Sales commissions |
34,000 |
Factory administration |
16,000 |
Non factory administrative expenses |
20,000 |
Other manufacturing overhead* |
48,000 |
*Provides for operating 35,000 machine hours. |
a. Calculate the predetermined manufacturing overhead rate for the coming year for each of the following application bases: (1) direct labor hours, (2) direct labor costs, and (3) machine hours.Round direct labor hours and machine hours answers to two decimal places, when applicable. Round direct labor costs to the nearest one decimal place percentage, when applicable (example: 76.4%).
Application base |
Manufacturing |
Direct labor hours |
$Answer |
Direct labor costs |
%Answer |
Machine hours |
Answer |
b. For each item in requirement a, determine the proper application of manufacturing overhead to Job 63, to which 16 direct labor hours, $150 of direct labor cost, and 40 machine hours have been charged. Round answers to two decimal places, when applicable.
Application base |
Overhead applied to Job 63 |
Direct labor hours |
Answer |
Direct labor costs |
Answer |
Machine hours |
|
a. Calculate the predetermined manufacturing overhead rate for the coming year for each of the following application bases: (1) direct labor hours, (2) direct labor costs, and (3) machine hours.Round direct labor hours and machine hours answers to two decimal places, when applicable. Round direct labor costs to the nearest one decimal place percentage, when applicable (example: 76.4%).
Application base |
Manufacturing |
Direct labor hours |
98000/14000 = 7 per hour |
Direct labor costs |
98000/140000 = 70% |
Machine hours |
98000/35000 = 2.8 per machine hour |
b. For each item in requirement a, determine the proper application of manufacturing overhead to Job 63, to which 16 direct labor hours, $150 of direct labor cost, and 40 machine hours have been charged. Round answers to two decimal places, when applicable.
Application base |
Overhead applied to Job 63 |
Direct labor hours |
16*7 = 112 |
Direct labor costs |
150*.70 = 105 |
Machine hours |
40*2.8 = 112 |