A company expects next year's overhead costs to be $400,000. During this time, the company also expects to produce 1,000,000 units, have 200,000 direct labor hours, and 800,000 machine hours.Make the following independent calculations.a. Compute a plantwide overhead rate using units of production as the allocation base.b. Compute a plantwide overhead rate using direct labor hours as the allocation base.c. Compute a plantwide overhead rate using machine hours as the allocation base.
What will be an ideal response?
a.) $400,000/1,000,000 units = $0.40 per unit of product
b. $400,000/200,000 direct labor hours = $2 per DLH
c. $400,000/800,000 machine hours = $0.50 per MH
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