Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are estimated to total $348,425 for the year, and machine usage is estimated at 126,700 hours. For the year, $399,060 of overhead costs are incurred and 130,500 hours are used.

Compute the manufacturing overhead rate for the year.

Question

Business

Sleeping Beauty

31 May, 10:44

Ikerd Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are estimated to total $348,425 for the year, and machine usage is estimated at 126,700 hours. For the year, $399,060 of overhead costs are incurred and 130,500 hours are used.

Compute the manufacturing overhead rate for the year.

+5

Answers (1)

Know the Answer?

Jenny Tate · Answer 1

Estimated manufacturing overhead rate = $2.75 per machine hour

Explanation:

Giving the following information:

Overhead costs are estimated to total $348,425 for the year, and machine usage is estimated at 126,700 hours.

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

Estimated manufacturing overhead rate = 348,425/126,700 = $2.75 per machine hour