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14 May, 14:40

Wallis company manufactures only one product and uses a standard cost system. the company uses a predetermined plantwide overhead rate that relies on direct labor-hours as the allocation base. all of the company's manufacturing overhead costs are fixed-it does not incur any variable manufacturing overhead costs. the predetermined overhead rate is based on a cost formula that estimated $2,886,000 of fixed manufacturing overhead for an estimated allocation base of 288,600 direct labor-hours. wallis does not maintain any beginning or ending work in process inventory.

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  1. 14 May, 15:59
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    Estimated manufacturing overhead rate = $10 per direct labor hour

    Explanation:

    Giving the following information:

    estimated manufacturing overhead = $2,886,000

    estimated direct labor dollars = 288,600

    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 = 2,886,000/288,600 = $10 per direct labor hour
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