Homework SourseJ Company uses a predetermined overhead rate based on machin
J Company uses a predetermined overhead rate based on machine hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for the next year:
J Co. estimates that 6,000 machine hours will occur during the year. What is the predetermined rate for the year?
| Direct materials | $ 6,000 |
| Direct labor | $12,000 |
| Rent on factory building | $15,000 |
| Sales salaries | $24,000 |
| Depreciation on factory equipment | $ 9,000 |
| Production supervisor’s salary | $30,000 |
Solution
Total manufacuring overhead is:
Sales salaries are not production overhead.
Predetermined overhead rate = estimated total overhead / estimated machine hours = 54000/6000 =9 per hour
| particulars | Amount |
| Rent | 15000 |
| Depreciation | 9000 |
| Production supervisor salary | 30000 |
| Total | 54000 |
