Question

The following data relates to Black-Out Company's estimated amounts for next year. Estimated: Department 1 Department 2 Manufacturing overhead costs $ 700,000​ $ 1,040,000​ Direct labor hours 80,000​ DLH 100,000​ DLH Machine hours 3000​ MH 4000​ MH What is the company's plantwide overhead rate if machine hours are the allocation base? (Round your answer to two decimal places.)

Answer 1

Answer:

$249 per machine hour

Explanation:

Given that,

Department 1:

Manufacturing overhead costs = $700,000

Direct labor hours =  80,000​ DLH

Machine hours = 3000​ MH

Department 2:

Manufacturing overhead costs = $1,040,000

Direct labor hours = 100,000​ DLH

Machine hours = 4000​ MH

Therefore,

Total manufacturing overhead:

= Manufacturing overhead of Department 1 + manufacturing cost of department 2

= $700,000 + $1,040,000

= $1,740,000

Total machine hours:

= Machine hours of department 1 + Machine hours of department 2

= 3,000​ MH + 4,000​ MH

= 7,000 MH

Manufacturing overhead rate per hour of both the department:

= Total manufacturing overhead ÷ Total machine hours

= $1,740,000 ÷  7,000 MH

= $249 per machine hour