Reference no: EM132655570
Problem 1: Calculate the company's predetermined manufacturing overhead rate, assuming the company uses direct labor hours as its allocation base.
Type of Cost Estimated total cost for the year
Selling and Administrative salaries and expenses $ 210,000
Direct Labor (Estimated 40,000 DL hours @ average wage rate of $12 per hour) $ 480,000
Indirect plant labor $ 40,000
Plant utilities $ 50,000
Purchases of direct materials $ 1,400,000
Lease and property taxes on the plant $ 120,000
Marketing expenses $ 30,000
Depreciation on production equipment (equipment originally costing $700,000 three year ago is being depreciated over a 5 year useful life using straight-line depreciation. No salvage value is expected.) $ 140,000
Indirect materials to be used in the plant $ 20,000
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