Calculate and Use Overhead Rate During the coming accounting year, Baker Manufacturing, Inc., anticipates the following costs, expenses, and operating data, related to Job 63:
Direct material (16,000 lb.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 80,000
Direct labor (@ $10/hr.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,000
Indirect material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Indirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000
Sales commissions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,000
Factory administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000
Non factory administrative expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Other manufacturing overhead* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,000
*Provides for operating 35,000 machine hours
a. Calculate the predetermined manufacturing overhead rate for the coming year for each of the following application bases: (1) direct labor hours, (2) direct labor costs, and (3) machine hours.
b. For each item in requirement a, determine the proper application of manufacturing overhead to Job 63, to which 16 direct labor hours, $150 of direct labor cost, and 40 machine hours have been charged.