Chapter 8 Setting Overhead Rates 181 s4Calculate overhead rates. (Obj.3). The Un
ID: 2552198 • Letter: C
Question
Chapter 8 Setting Overhead Rates 181 s4Calculate overhead rates. (Obj.3). The United Tailors Company used the direct labor costs basis in establishing overhead rates for its producing departments. For the year 2006, the company estimated the following manufacturing overhead budgets: Building Services Department 101 Department 102 Department 103 $48,860 75,300 83,800 78,518 Building Services is a service department that assists the producing departments. Its over- head is allocated to the producing departments on the basis of floor space occupied. The floor space occupied by each department is given below. Square Feet Occupied 2,660 1,900 3,040 Direct Labor Costs Department 101 Department 102 Department 103 $154,000 148,860 125,239 Determine the manufacturing overhead rates for each department for the year. Carry your answers to six decimal places, round to five, and then change to percents.Explanation / Answer
Manufacturing overhead rate :
Department 101 = 75300/154000 = 0.48896 = 48.896% of direct labour cost
Department 102 = 83800/148860 = 0.56295 = 56.295% of direct labour cost
Department 103 = 78518/125239 = 0.62695 = 62.695% of direct labour cost