Compute Jackson's predetermined overhead allocation rate.
Understand the Problem
The question is asking how to compute the predetermined overhead allocation rate for Jackson Foundry using provided data, including manufacturing overhead costs, direct labor costs, and machine hours.
Answer
The predetermined overhead allocation rate is $10 per machine hour.
Answer for screen readers
The predetermined overhead allocation rate for Jackson Foundry is $10 per machine hour.
Steps to Solve
- Identify Required Data
You need to identify the overhead costs and the machine hours from the data provided.
- Manufacturing overhead costs: $850,000
- Machine hours: 85,000 hours
- Calculate the Predetermined Overhead Allocation Rate
Use the formula for calculating the predetermined overhead allocation rate:
$$ \text{Predetermined Overhead Allocation Rate} = \frac{\text{Total Manufacturing Overhead Costs}}{\text{Total Machine Hours}} $$
Substituting the values:
$$ \text{Predetermined Overhead Allocation Rate} = \frac{850,000}{85,000} $$
- Perform the Division
Now compute the division to find the predetermined overhead allocation rate:
$$ \text{Predetermined Overhead Allocation Rate} = 10 $$
This means the overhead allocation rate is $10 per machine hour.
The predetermined overhead allocation rate for Jackson Foundry is $10 per machine hour.
More Information
The predetermined overhead allocation rate helps in planning and controlling overhead costs by allocating overhead to individual jobs based on the machine hours used. This rate is crucial for proper costing of products.
Tips
- Incorrect data interpretation: Ensure that the correct values are being used for overhead costs and machine hours. Double-check the figures from the data table.
- Division errors: Verify calculations to avoid mistakes when performing the division.
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