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Plantwide predetermined overhead rates using labor

Direct material 2,500 pounds (.75 per pound)
Direct labor 300 hours (7.50 per hour)
Overhead per dept (est.) $6,000
Direct labor (est.) 300 hours (200 in molding and 100 in firing)
Machine hours (est.) 200 (50 in molding and 150 in firing)

factory rent $3,000
factory utilities $3,700
advertising $2,500
factory equipment depre $3,000
sales commission $2,500
$14,700 overhead

Calculate a plantwide predetermined overhead rate using direct labor hours as the cost driver.
Calculate a plantwide predetermined overhead rate using machine hours as the cost driver.
Using the plantwide rate calculated on the basis of direct labor hours, how much overhead would be applied to a job requiring 25 direct labor hours?

Using the plantwide rate calculated on the basis of machine hours, how much overhead would be applied to a job requiring 5 machine hours?

Crystal is considering the use of department overhead rates. Assume that the cost driver for the molding department is machine hours.

How much overhead would be applied to a job using 10 direct labor hours and 3 machine hours in the molding department and 4 direct labor hours and 2 machine hours in the firing department?

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ANSWERS

Calculate a plantwide predetermined overhead rate using direct labor hours as the cost driver.
Plantwide predetermined overhead rate = Total overhead/direct labor hours = $14,700/300 hours = $49 per direct labor hour

Calculate a plantwide predetermined overhead rate using machine hours as the cost ...

Solution Summary

Plantwide predetermined overhead rates using labor are examined.

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