Rupe Company has two departments: Machining and Assembly. The following estimates are for the coming year:
-A single predetermined manufacturing cost driver rate based on total plant direct labor hours is:
A)$ 4 per direct labor hour.
B)$10 per direct labor hour.
C)$20 per direct labor hour.
D)$40 per direct labor hour..

Question

Rupe Company has two departments: Machining and Assembly. The following estimates are for the coming year: 
-A single predetermined manufacturing cost driver rate based on total plant direct labor hours is:
A)$ 4 per direct labor hour. 
B)$10 per direct labor hour. 
C)$20 per direct labor hour. 
D)$40 per direct labor hour..

Quizplus · Accepted Answer

The predetermined manufacturing cost driver rate based on total plant direct labor hours is calculated by dividing the total estimated manufacturing overhead costs by the total estimated direct labor hours. From the given estimates, we have:
Total estimated manufacturing overhead costs = $800,000 + $400,000 = $1,200,000
Total estimated direct labor hours = 60,000 + 20,000 = 80,000
Therefore, the predetermined manufacturing cost driver rate based on total plant direct labor hours is:
$1,200,000 / 80,000 = $20 per direct labor hour. Thus, the correct answer is (C).

Rupe Company Has Two Departments: Machining and Assembly