A furniture corporation manufactures two models of furniture—Standard and Deluxe. The total estimated manufacturing overhead costs are $64,300. The following estimates are available:
Standard Deluxe
Direct materials cost per unit $240 $280
Direct labor cost per unit $120 $135
Number of units 250 500
The company uses direct labor costs as the base to allocate manufacturing overhead. Calculate the predetermined overhead rate. (Round your answer to two decimal places.)
A) 32.15%
B) 33.84%
C) 190.52%
D) 65.95%
D .D) Total direct labor cost = ($120 x 250 units) + ($135 x 500 units) = $97,500
Predetermined overhead allocation rate = $64,300 / $97,500 = 65.95% of direct labor costs
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