The following data relates to Black-Out Company's estimated amounts for next year. Estimated: Department 1 Department 2 Manufacturing overhead costs $ 700,000 $ 1,040,000 Direct labor hours 80,000 DLH 100,000 DLH Machine hours 3000 MH 4000 MH What is the company's plantwide overhead rate if machine hours are the allocation base? (Round your answer to two decimal places.)

$249 per machine hour

Explanation:

Given that,

Department 1:

Manufacturing overhead costs = $700,000

Direct labor hours =  80,000 DLH

Machine hours = 3000 MH

Department 2:

Manufacturing overhead costs = $1,040,000

Direct labor hours = 100,000 DLH

Machine hours = 4000 MH

Therefore,

Total manufacturing overhead:

= Manufacturing overhead of Department 1 + manufacturing cost of department 2

= $700,000 + $1,040,000

= $1,740,000

Total machine hours:

= Machine hours of department 1 + Machine hours of department 2

= 3,000 MH + 4,000 MH

= 7,000 MH

Manufacturing overhead rate per hour of both the department:

= Total manufacturing overhead ÷ Total machine hours

= $1,740,000 ÷  7,000 MH

= $249 per machine hour

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