Missy & Daughters allocates manufacturing overhead to jobs based on machine hour
ID: 2490170 • Letter: M
Question
Missy & Daughters allocates manufacturing overhead to jobs based on machine hours. The company has the following estimated costs fr the upcoming year;
DM used $50000 DL costs $70000 Wages factory janitors $39000 Sales supervisor salary $51000 Utilities for factory $16000 Rent on factory building $13000
Advertising expense $5000
The company estimates that 1360 Direct labor hours will be worked in the upcoming year, while 1000 machine hours will be used during the year. The predetermined manufacturing overhead rate per machine hour will be:______
Explanation / Answer
Overhead Rate Per Machine Hour = Budegeted Overheads/ Budgeted machine Hours
=68,000/1,000 Machine Hours
=68 per machine hour
Budgeted Overheads - Wages factory janitors $39000
Utilities for factory $16000
Rent on factory building $13000
Total $68,000
Note- Sales supervisory salaries and advertisement expenses are part of selling expenses, they will be directly charged to income statement.
Note- Direct Material and Labour is not a part of overhead costs.