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# Formula for finding the allocation rate?

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 Total Machine hours 20000

For the year:

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?