Question

X Company manufactures custom cabinets. Direct materials (wood, hinges, etc) and direct labor are assigned directly to the products. Manufacturing overhead is assigned to jobs using a predetermined overhead rate based on machine hours. Cost (Item) 2014 Actual 2015 Estimated 2015 Actual Machine hours 8,500 10,000 10,500 Machine Repairs $184,500 $200,000 $209,000 Factory Supervisor Salary $60,000 $60,000 $60,000 Oil for machines $2,100 $2,000 $2,050 Advertising $42,000 $45,000 $45,500 Depreciation-Machines $10,000 $10,000 $10,000 Sales Commissions $35,000 $40,000 $41,000 Factory Utilities $32,000 $28,000 $25,500 Compute the predetermined Manufacturing overhead rate per machine hour for 2015. Do not enter dollar signs or decimal points and round to the nearest dollar. For example, enter $23.67 per hour as 24:

Answer 1

Estimated manufacturing overhead = Machine repairs + Factory supervisor salary + Oil for machines + Depreciation machines + Factory utilities

= 200,000+60,000+2,000+10,000+28,000

= $300,000

Estimated machine hours = 10,000

Predetermined overhead rate = Estimated manufacturing overhead / Estimated machine hours

= 300,000/10,000

= 30 per hour

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