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M & S Company: Overhead Rate and Direct Labor

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The M & S Company uses normal costing. The following information pertains to a recent production period:

Estimated manufacturing overhead = $70,000
Actual manufacturing overhead = $82,000
Machine hours = 14,000
Actual machine hours = 14,500
Estimated direct labor hours = 2,000
Actual direct labor hours = 2,300

a. Determine the predetermined overhead rate if the company uses machine hours as the activity base.
b. Determine the predetermined overhead rate if the company uses direct labor hours as the activity base.
c. If machine hours is used as the activity base, how much manufacturing overhead would be applied for the period.

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Solution Summary

This solution shows step-by-step calculations in an Excel file to determine overhead rate using machine hours and direct labor.

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