Bronzit Company estimated the following at the beginning of the year: Assembly D

Question

Bronzit Company estimated the following at the beginning of the year: Assembly Department esting Department Total $700,000 $100,000 Direct Labor Hours Machine Hours 150,500 hrs 37,000 hrs. 40,500 hrs. 72,000 hrs. 191,000 hrs. Bronzit uses departmental overhead rates. In the assembl testing department. y department, direct labor hours are used to apply overhead. Machine hours are used to apply overhead in the Actual data for the month of May is as follows Testing Department $11,000 Assembly Department Total $61,000 20,000 hrs 3,500 hrs 22,500 hrs 17,500 hrs Direct Labor Hours 2,500 hrs. 14,000 hrs If Bronzit uses a plant wide overhead rate based on direct labor hours, instead of departmental rates, what is the predetermined overhead rate rounded to the nearest cent? a. $5 per direct labor hour Ob. $8.65 per direct labor hour Oc. $4.50 per direct labor hour Od. $4.19 per direct labor hour e.$o.33 per direct labor hour /5/2018

Explanation / Answer

Total Overhead is the sum of overhead amount of two departments.

Total Estimated Overhead = $ 800,000.

We need to take estimated overhead in calculating predetermined overhead rate.

Estimated Total no. of Direct Labor hours = 191,000 hours.

Predetermined Overhead Rate = $ 800,000 / 191,000 hours

Predetermined Overhead Rate = $ 4.188 or $4.19

Therefore, Option D is correct answer.

The predetermined overhead rate is $ 4.19, if plantwide overhead rate based on direct labour hours is taken.

Hope this is helpful!!

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