Week of November 16, 2009
Gearloose Manufacturing has the following estimates for the next year for indirect and
direct product costs:
Amount (all are estimates)
Indirect Materials (fasteners,
Direct Materials Expenses
Direct Labor Expenses
Find the predetermined overhead cost driver rate to use for the year.
uses direct labor hours as the cost driver, and estimates that direct labor cost is an average
of $18 per hour.
Total OH = 94,000 + 78,000 + 140,000 + 80,000 + 24,000 = $416,000
Total DLH = 670,000/18 = 37,222.2 hours
Driver = 416,000/37,222.2 = $11.18 per direct labor hour
In January 2010, Gearloose Manufacturing builds a batch of 20 gearboxes for the
Zapper electric car, which takes $28,000 in direct materials, and $19,000 (1000 hours) of
How much overhead expense would be charged to this batch?