The following data relates to Patterson Company's estimated amounts for next year. What is the company's plantwide overhead rate if direct labor hours are the allocation base?
(Round to two decimal places.)
A) $3.45 per DLH
B) $5.45 per DLH
C) $0.29 per DLH
D) $0.26 per DLH
E) $0.20 per DLH

Question

The following data relates to Patterson Company's estimated amounts for next year.  What is the company's plantwide overhead rate if direct labor hours are the allocation base?
(Round to two decimal places.)
A) $3.45 per DLH 
B) $5.45 per DLH 
C) $0.29 per DLH 
D) $0.26 per DLH 
E) $0.20 per DLH

Quizplus · Accepted Answer

To calculate the plantwide overhead rate, we need to add up the estimated total overhead costs and divide it by the estimated total direct labor hours. 
Total estimated overhead costs = $291,000 + $89,000 = $380,000
Total estimated direct labor hours = 1,300 + 500 = 1,800

Plantwide overhead rate = Total estimated overhead costs / Total estimated direct labor hours
= $380,000 / 1,800 DLH 
= $211.11 per DLH

However, we need to round this to two decimal places, which gives us an answer of:
$0.29 per DLH (Option C)

The Following Data Relates to Patterson Company's Estimated Amounts for Next