8 ptX Company has the following estimated costs for the year: Direct materials D

Question

8 ptX Company has the following estimated costs for the year: Direct materials Direct labor Factory supplies Factory maintenance Marketing research Factory rent Sales salaries Factory insurance $56,000 22,400 18,700 29,000 43,700 45,700 42,000 66,800 X Company estimates that machines will be operated for 62,000 hours during the year, and 1,400 direct labor hours will be worked during the year. If overhead is allocated on the basis of machine hours, what will the overhead rate be? 2. AO $1.18 BO $1.38 CO $1.6 DO $1.88 EO $2.21 FO $2.58

Explanation / Answer

F. $2.58

Total Overhead Cost = Factory Supplies + Factory maintenance + Factory Rent + Factory Insurance = $18,700 + $29,000 + $45,700 + $66,800 = $160,200

Overhead rate = $160,200 / 62,000 = $2.58

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