Calculate and Use Overhead Rate During the coming accounting

Calculate and Use Overhead Rate During the coming accounting year, Baker Manufacturing, Inc, anticipates the following costs, expenses, and operating data Direct material (16,000 lb.) 120,000 210,000 18,000 33,000 51,000 24,000 30,000 72,000 Direct labor(e $15.00/hr.) Indirect material indirect labor Sales commissions Factory administration Non factory administrative expenses Other manufacturing overhead* Provides for operating 52,500 machine hours. a. Calculate the predetermined manufacturing overhead rate for the coming year for each of the following application bases: (1) direct labor hours, (2) direct labor costs, and (3) machine hours. Round direct labor hours one decimal place percentage, when applicable (example: 76.4%). and machine hours answers to two decimal places, when applicable. Round direct labor costs to the nearest Manufacturing overhead rate Application base Direct labor hours Direct labor costs Machine hours b. For each item in requirement a, determine the proper application of manufacturing overhead to job 63, to which 24 direct la hours, $225 of direct labor cost, and 60 machine hours have been charged. bor Round answers to two decimal places, when applicable.

Solution

Workings:

Direct labor hours = $210000/$15 = 14000 hours

a.	Application base	Manufacturing overhead rate
	Direct labor hours	$10.50
		($147000/14000)
	Direct labor costs	70.0%
		($147000/$210000)
	Machine hours	$2.80
		($147000/52500)
b.	Application base	Manufacturing overhead rate
	Direct labor hours	$252.00
		(24 x $10.50)
	Direct labor costs	$157.50
		($225 x 70%)
	Machine hours	$168.00
		(60 x $2.80)