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Calculate the company's predetermined manufacturing overhead rate, assuming the company uses direct labor hours as its allocation base. The answer I came up with is

Calculate the company's predetermined manufacturing overhead rate, assuming the company uses direct labor hours as its allocation base.

The answer I came up with is $9.25, I am uncertain of this answer and asking for guidance on it,

Type of Cost Estimated total cost for the year

Selling and Administrative salaries and expenses $210,000

Direct Labor (Estimated 40,000 DL hours @ average wage rate of $12 per hour) $480,000

Indirect plant labor $40,000

Plant utilities $50,000

Purchases of direct materials $1,400,000

Lease and property taxes on the plant $120,000

Marketing expenses $30,000

Depreciation on production equipment (equipment originally costing $700,000 three year ago is being depreciated over a 5 year useful life using straight-line depreciation.No salvage value is expected.) $140,000

Indirect materials to be used in the plant $20,000

My answer is as follows

Indirect plant labor $40,000

Plant utilities $50,000

Lease and property taxes on plant $120,000

Depreciation on Production Equipment (700000-0)/5 $140,000

Indirect materials to be used in the plant $20,000

Total Manufacturing overhead $370,000

Estimated Direct Labor hours $40,000

Predetermined overhead rate per direct labor 370000/40000 $9.25

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