COST ACCOUNTING
MANUFACTURING OVERHEAD
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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(budgeted manufacturing cost/budgeted production) x 100%
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(budgeted manufacturing overhead cost/budgeted direct labour hours) x 100%
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(budgeted manufacturing overhead cost/budgeted direct labour cost) x 100%
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(budgeted manufacturing cost/budgeted direct labour cost) x 100%
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Detailed explanation-1: -You can calculate predetermined overhead rate by dividing the manufacturing overhead cost by the activity driver. For example, if the activity driver was machine-hours, then you would divide overhead costs by the estimated number of machine hours.
Detailed explanation-2: -You may also calculate the overhead rate based on direct labor hours. Divide the overhead costs by the direct labor hours over the same measurement period. In the example, the overhead rate is $20 for each direct labor hour ($2, 000/100).
Detailed explanation-3: -Manufacturing Overhead Formula To get a percentage, divide by your monthly sales and multiply that number by 100. Here’s the manufacturing overhead equation: Manufacturing Overhead Costs / Number of Sales x 100 = Percentage.