Question 4 5 pts Paulson Company had the following estimat ed costs for 2019 Dir

ID: 2430141 • Letter: Q

Question

Question 4 5 pts Paulson Company had the following estimat ed costs for 2019 Direct materials $28 Direct labor. Advertising expense Rent on factory building 13 500 Depreciation on factory equipment 500 Indirect naterials 10 Sales comnissions Production supervisor's salary 28 Insurance on equipment 15 It is known that 40% of the insurance rel ates to equipment in the factory while 60% of the insurance relate s to the equipment in the adninistrative offices Paulson Company estimates that 25,000 mac hine hours wil1 be used during 2019 Calculate Paulson Conpanys d overhead rate based on nachine hours

Explanation / Answer

Manufacturing Overhead

Rent on factory building

$ 13,500

Depreciation on factory equipment

$ 6,500

Indirect material

$ 10,000

Production supervisor's salary

$ 28,000

Insurance ($ 15,000 x 0.4)

$ 6,000

Total manufacturing overhead

$ 64,000

Predetermined overhead rate = Total estimated overhead rate/Estimated machine hours

= $ 64,000/25,000

= $ 2.56 per machine hours