The Deenut Company estimates the following overhead costs for the coming vear Eq

Question

The Deenut Company estimates the following overhead costs for the coming vear Equipment depreciation Equipment maintenance Supervisory salaries Factory rent and utilities Total 400,000 50,000 20,000 16,000 486,000 Deenut budget forecasts for the upcoming year include direct labor costs of machine hours of material handling actions 600,000 14,000 25,000 Using direct labor costs as the allocation base, calculate the predetermined overhead rate Numerator Denominator OH Rate Using machine hours as the allocation base, calculate the predetermined overhead rate Numerator Denominator OH Rate Using material handling actions as the allocation base, calculate the predetermined overhead rate Numerator Denominator OH Rate

Explanation / Answer

1 Estimated overhead/Direct labor Costs = OH rate 486000/600000= 81% 2 Estimated overhead/Machine hours = OH rate 486000/14000= $34.71 3 Estimated overhead/Material handling actions = OH rate 486000/25000= $19.44

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