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(solution) Jones Manufacturing Company makes two products. The company's


Jones Manufacturing Company makes two products. The company?s budget includes $470,500 of overhead. In the past, the company allocated overhead based on estimated total direct labor hours of 18,820. Jones recently implemented an activity-based costing system and had determined that overhead can be broken into three overhead pools: processed purchase orders, machine setups, and good shipped. The following is a summary of company information:

Estimated Cost Estimated Activities
Orders processed $78,750 5,250 orders
Machine setups 13,500 540 machine hours
Shipping 36,051 59,100 shipments
$128,301
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(a) Calculate the company?s overhead rate based on total direct hours.

The company?s overhead rate

$ per direct labor hour

 


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