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20-02-2020
Business

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Sunland Company manufactures a line of lightweight running shoes. CEO Mark Sunland estimated that the company would incur $3,379,520 in manufacturing overhead during the coming year. Additionally, he estimated the company would operate at a level requiring 236,000 direct labor hours and 617,828 machine hours. Assume that Sinclair Company uses direct labor hours as its manufacturing overhead application base. Calculate the company's predetermined overhead rate.

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24-02-2020

Answer:

Estimated manufacturing overhead rate= $14.32 per direct labor hour

Explanation:

Giving the following information:

CEO Mark Sunland estimated that the company would incur $3,379,520 in manufacturing overhead during the coming year.

Direct labor hours= 236,000

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= 3,379,520/236,000= $14.32 per direct labor hour

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