Jones Manufacturing Company makes two products. The companyâs budget includes $470,500 of overhead. In the past, the company allocated overhead based on estimated total direct labor hours of 18,820. Jones recently implemented an activity-based costing system and had determined that overhead can be broken into three overhead pools: processed purchase orders, machine setups, and good shipped. The following is a summary of company information:
Estimated Cost | Estimated Activities | Orders processed | $78,750 | 5,250 orders | Machine setups | 13,500 | 540 machine hours | Shipping | 36,051 | 59,100 shipments | $128,301 |
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| (a) Calculate the companyâs overhead rate based on total direct hours.
The companyâs overhead rate | $ per direct labor hour |
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