Clinton Manufacturing uses a predetermined overhead allocation rate based on direct labor costs.The following are the details of production during the year: $$\begin{array} { | l | l | }
\hline \begin{array} { l }
\text { Total manufacturing overhead costs estimated at the beginning } \
\text { of the year }
\end{array} & \$ 150,000 \
\hline \text { Total direct labor costs estimated at the beginning of the year } & \$ 350,000 \
\hline \text { Total direct labor hours estimated at the beginning of the year } & 11,000 \text { direct labor hours } \
\hline \text { Actual manufacturing overhead costs for the year } & \$ 160,000 \
\hline \text { Actual direct labor costs for the year } & \$ 360,000 \
\hline \text { Actual direct labor hours for the year } & 12,400 \text { direct labor hours } \
\hline
\end{array}$$ Calculate the amount of manufacturing overhead costs allocated to production.(Round any percentages to two decimal places and your final answer to the nearest dollar.)

Question

Clinton Manufacturing uses a predetermined overhead allocation rate based on direct labor costs.The following are the details of production during the year: $$\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Total manufacturing overhead costs estimated at the beginning } \
\text { of the year }
\end{array} & \$ 150,000 \
\hline \text { Total direct labor costs estimated at the beginning of the year } & \$ 350,000 \
\hline \text { Total direct labor hours estimated at the beginning of the year } & 11,000 \text { direct labor hours } \
\hline \text { Actual manufacturing overhead costs for the year } & \$ 160,000 \
\hline \text { Actual direct labor costs for the year } & \$ 360,000 \
\hline \text { Actual direct labor hours for the year } & 12,400 \text { direct labor hours } \
\hline
\end{array}$$ Calculate the amount of manufacturing overhead costs allocated to production.(Round any percentages to two decimal places and your final answer to the nearest dollar.)

Quizplus · Accepted Answer

The predetermined overhead allocation rate is calculated based on the estimated figures at the beginning of the year. The rate is calculated as follows: $$ \text{Predetermined Overhead Rate} = \frac{\text{Total Estimated Manufacturing Overhead Costs}}{\text{Total Estimated Direct Labor Costs}} = \frac{\$150,000}{\$350,000} = 0.4286 \text{ or } 42.86\%. $$ To find the amount of manufacturing overhead costs allocated to production, multiply the actual direct labor costs by the predetermined overhead rate: $$ \text{Allocated Manufacturing Overhead Costs} = \text{Actual Direct Labor Costs} \times \text{Predetermined Overhead Rate} = \$360,000 \times 0.4286 = \$154,296. $$

Clinton Manufacturing Uses a Predetermined Overhead Allocation Rate Based on Direct