Modiste, Inc manufactures two kinds of bags—totes and satchels
The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are $24,000. Additional estimated information is given below.
Totes Satchels
Direct materials cost per unit $33 $43
Direct labor cost per unit $50 $61
Number of units 530 380
Calculate the predetermined overhead allocation rate. (Round your answer to two decimal places.)
A) 90.57%
B) 48.31%
C) 96.58%
D) 1.36%
B .B)
Direct labor Number Total direct
cost per unit of units labor cost
Totes $50 530 $26,500
Satchels $61 380 $23,180
Total $49,680
Predetermined overhead allocation rate = Total estimated overhead costs / Total estimated quantity of the overhead allocation base = $24,000 / $49,680 = 48.31% of direct labor cost
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