The Osborne Company manufactures products in two departments: Mixing and Packagi

Question

The Osborne Company manufactures products in two departments: Mixing and Packaging. The company allocates manufacturing overhead using a single plantwide rate with direct labor hours as the allocation base. Estimated overhead costs for the year are &650,000, and estimated direct labor hours are 300,000. In October, the company incurred 25,000 direct labor hours

Requirement:

1. Compute the predetermined overhead allocation rate. Round to two decimal places.

2. Determine the amount of overhead allocated in October

Explanation / Answer

1 Predetermined overhead allocation rate=650000/300000= $2.17 2 Amount of overhead allocated=25000*2.17= $54250 or $54167

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