Bella, Inc. manufactures two kinds of bags-totes and satchels. The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are $25,750. Additional estimated information is given below. $$\begin{array} { | l | r | r | }
\hline & \text { Totes } & \text { Satchels } \
\hline \text { Direct materials cost per unit } & \$ 33 & \$ 44 \
\hline \text { Direct labor cost per unit } & \$ 52 & \$ 60 \
\hline \text { Number of units } & 520 & 370 \
\hline
\end{array}$$ Calculate the predetermined overhead allocation rate. (Round your answer to two decimal places.)
A) 95.23%
B) 52.29%
C) 86.21%
D) 1.49%

Question

Bella, Inc. manufactures two kinds of bags-totes and satchels. The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are $25,750. Additional estimated information is given below. $$\begin{array} { | l | r | r | } 
\hline & \text { Totes } & \text { Satchels } \
\hline \text { Direct materials cost per unit } & \$ 33 & \$ 44 \
\hline \text { Direct labor cost per unit } & \$ 52 & \$ 60 \
\hline \text { Number of units } & 520 & 370 \
\hline
\end{array}$$ Calculate the predetermined overhead allocation rate. (Round your answer to two decimal places.)
A) 95.23%
B) 52.29%
C) 86.21%
D) 1.49%

Quizplus · Accepted Answer

The predetermined overhead allocation rate is calculated by dividing the total estimated overhead costs by the total estimated direct labor costs, then multiplying by 100 to get a percentage. Total direct labor costs = (520 units * $52/unit) + (370 units * $60/unit) = $27,040 + $22,200 = $49,240. Overhead rate = ($25,750 / $49,240) * 100 = 52.29%.

Bella, Inc Calculate the Predetermined Overhead Allocation Rate