[lashann]

I am trying to determine the cost driver rate for the following. I actually tried the problem using this formula: 455,000/(14,000 + 3,500) Here I added the manufacturing supports cost and direct labor cost divided by the total of the direct labor hours and direct labor cost.

I do not think I am doing this correctly can someone please help.

Manufacturing support cost = $350,000
Machine hours = 14,000
Direct labor hours = 3,500
Direct labor cost = $105,000

Once again how will I determine the cost driver rate?

Please help!! :(

[rehmanvohra]

You have to determine which activity that drives the manufacturing support cost, and calculate the rate by dividing the manufacturing support costs by that driver. I would personally feel that the activity would be either labor hours or machine hours. For labor hours the rate will be 100 per labor hour and 25 per machine hour

[lashann]

Thans for your help