Mcleese,Inc. ,manufactures and sells two products: Product I6 and Product L1.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $26.60 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity: If the company allocates all of its overhead based on direct labor-hours using its traditional costing method,the predetermined overhead rate would be closest to:
A)$50.97 per DLH
B)$21.78 per DLH
C)$63.58 per DLH
D)$67.46 per DLH

Question

Mcleese,Inc. ,manufactures and sells two products: Product I6 and Product L1.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below:  The direct labor rate is $26.60 per DLH.The direct materials cost per unit for each product is given below:  The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity:  If the company allocates all of its overhead based on direct labor-hours using its traditional costing method,the predetermined overhead rate would be closest to:
A)$50.97 per DLH 
B)$21.78 per DLH 
C)$63.58 per DLH 
D)$67.46 per DLH

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $667,835 ÷ 9,900 DLHs = $67.46 per DLH (rounded)