Moonrays,Inc.manufactures both normal and premium tube lights.The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base.Estimated overhead costs for the year are $108,000.Additional estimated information is given below. $$\begin{array} { | l | r | r | }
\hline & \text { Normal } & \text { Premium } \
\hline \text { Machine hours (MHr) } & 29,000 & 48,000 \
\hline \text { Direct materials } & \$ 58,000 & \$ 440,000 \
\hline
\end{array}$$ Calculate the predetermined overhead allocation rate.(Round your answer to the nearest cent. )
A)$3.72 per direct labor hour
B)$1.40 per machine hour
C)$2.25 per machine hour
D)$0.22 per direct labor hour

Question

Moonrays,Inc.manufactures both normal and premium tube lights.The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base.Estimated overhead costs for the year are $108,000.Additional estimated information is given below. $$\begin{array} { | l | r | r | } 
\hline & \text { Normal } & \text { Premium } \
\hline \text { Machine hours (MHr) } & 29,000 & 48,000 \
\hline \text { Direct materials } & \$ 58,000 & \$ 440,000 \
\hline
\end{array}$$ Calculate the predetermined overhead allocation rate.(Round your answer to the nearest cent. )
A)$3.72 per direct labor hour
B)$1.40 per machine hour
C)$2.25 per machine hour
D)$0.22 per direct labor hour

Quizplus · Accepted Answer

The predetermined overhead allocation rate is calculated by dividing the total estimated overhead costs by the total estimated machine hours. Total machine hours = 29,000 + 48,000 = 77,000. Therefore, $108,000 / 77,000 MHr = $1.40 per machine hour.

Moonrays,Inc Calculate the Predetermined Overhead Allocation Rate