Calculate manufacturing overhead rates

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Question - Brooklyn Cycles produces custom bicycles and has used a traditional manufacturing overhead application rate based on direct labor hours. Currently, overhead is applied at the rate of $28.0/DLH. Brooklyn is now considering using activity-based driver rates to improve manufacturing overhead costing accuracy. Budgeted manufacturing overhead costs for expected driver activity are as follows:

 

Budgeted Cost

Budgeted Activity

Machining time

$324,000

12,000 hours

Direct labor time

352,000

22,000 hours

Inspection time

60,000

6,000 hours

Required - Calculate manufacturing overhead rates that would be applied to bicycles produced using activity-based costing.

Reference no: EM133127822

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