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Manufacturing overhead rate as a % of direct labor cost

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Morales Company's manufacturing overhead budget shows total variable cost of $198,000 and total fixed cost of $162,000. Total production in units is expected to be 160,000. It takes 15 minutes to make one unit, and the direct labor rate is $15 per hour. Express the manufacturing overhead rate as a percentage of direct labor cost, and an amount per direct labor hour.

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Solution Summary

The solution expresses the manufacturing overhead rate as a percentage of direct labor cost.

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First we need to calculation Direct labor hours,

Direct Labor Hours (DLH) = 160000*15/60 = 40,000 (DLH = No. of Units / time taken ...

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