Archangel Manufacturing calculated a predetermined overhead allocation rate at the beginning of the year based on direct labor costs. The production details for the year are given below: $\begin{array}{|l|r|}
\hline\begin{array}{l}
\text { Total manufacturing overhead costs estimated at the beginning } \
\text { of the year }
\end{array} & \$ 140,000 \
\hline \text { Total direct labor costs estimated at the beginning of the year } & \$ 320,000 \
\hline & 10,000 \text { direct labor } \
\text { Total direct labor hours estimated at the beginning of the year } & \$ 160,000 \
\hline \text { Actual manufacturing overhead costs for the year } & \$ 360,000 \
\hline \text { Actual direct labor costs for the year } & 12,200 \text { direct labor } \
& \text { hours }\
\hline
\end{array}$ Calculate the manufacturing overhead allocation rate for the year based on the above data. (Round your final answer to two decimal places.)

Question

Quizplus · Accepted Answer

The manufacturing overhead allocation rate is calculated based on the estimated costs at the beginning of the year. The formula is: $ \text{Overhead Allocation Rate} = \frac{\text{Total Estimated Manufacturing Overhead Costs}}{\text{Total Estimated Direct Labor Costs}} $. Using the given data: $ \frac{\$140,000}{\$320,000} = 0.4375 $ or 43.75%.

Archangel Manufacturing Calculated a Predetermined Overhead Allocation Rate at the Beginning