The following data pertain to the Oneida Restaurant Supply Company for the year just ended. Budgeted sales revenue $ 205,000 Actual manufacturing overhead 338,000 Budgeted machine hours (based on practical capacity) 10,000 Budgeted direct-labor hours (based on practical capacity) 20,000 Budgeted direct-labor rate $ 13 Budgeted manufacturing overhead $ 364,000 Actual machine hours 11,000 Actual direct-labor hours 18,000 Actual direct-labor rate $ 15 Exercise 3-35 Part 1 Required: 1. Compute the firm’s predetermined overhead rate for the year using each of the following common cost drivers: (a) machine hours, (b) direct-labor hours, and (c) direct-labor dollars.

Results are below.

Explanation:

Giving the following information:

Budgeted machine hours (based on practical capacity) 10,000

Budgeted direct-labor hours (based on practical capacity) 20,000 Budgeted direct-labor rate $ 13

Budgeted manufacturing overhead $ 364,000

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Machine hours:

Predetermined manufacturing overhead rate= 364,000 / 10,000

Predetermined manufacturing overhead rate= $36.4 per machine hour

Direct labor hours:

Predetermined manufacturing overhead rate= 364,000 / 20,000

Predetermined manufacturing overhead rate= $18.2 per direct labor hour

Direct labor cost:

Direct labor cost= 20,000*13= $260,000

Predetermined manufacturing overhead rate= 364,000 / 260,000

Predetermined manufacturing overhead rate= $1.4 per direct labor dollar