How to compute the plant wide overhead rate

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The Clothing Company manufactures two product lines: sweatshirts and T-shirts. The company currently uses a plant-wide overhead rate using labor hours to allocate overhead. At the beginning of the year, the company made the following estimates:

Product                                           Sweatshirts                  T-shirts

Machine hours per unit                     1                              0.5

Direct material cost per unit              $6                            $3

Direct labor hours per unit                     2                               1

Direct labor cost per unit                       $20                           $10

During the year, the company expected to produce 10,000 sweatshirts and 55,000 t-shirts. Expected manufacturing overhead cost for the year is $1,000,000.

Problem 1: Compute the plant wide overhead rate. Round to two decimal places.

Reference no: EM132563654

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