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Manal Elkhoshkhany
Manal Elkhoshkhany, Tutor
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Formula for finding the allocation rate?

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What is the formula for finding the allocation rate?

Hello

You divide Amount by the allocation base. For example if the total overhead costs is $100,000, and the allocation base is Direct Labor Hours, and the hours are 20,000 hours, then the allocation rate is $100,000/20,000 = $5

Regards,

Customer: replied 6 years ago.

So did I do this correctly?

At the start of the year

Estimated Manufacturing Overhead $1,000,000

Estimated Total Machine hours 20000

For the year:

Actual Manufacturing overhead $1,045,200

Actual Machine hours 20100

52.26 = 1 0 4 5 2 0 0 / 2000

I need to see the full question please, but I think (from what you wrote that this is incorrect because you are supposed to divide the estimated manufacturing overhead), still I would need to see the full question please.
Customer: replied 6 years ago.
Sorry...
Traditional costing employs what is referred to as a "peanut butter" approach to allocating manufacturing overhead costs. This approach is characterized by a company using a single rate to spread overhead costs (just like spreading peanut butter, so to speak) over products or service units.
Winward Yachts manufactures two products, stanchions and compass housings, and uses a single rate to allocate their manufacturing overhead costs. Their rate is based on machine hours.
Given the following information, what is the overhead allocation rate for Windward Yachts?
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