Question

In December 2016, Shire Computers management establishes the 2017 predetermined overhead rate based on direct labor cost. The information used in setting this rate includes estimates that the company will incur $747,500 of overhead costs and $575,000 of direct labor cost in year 2017. During March 2017, Shire began and completed Job 13-56. 1. What is the predetermined overhead rate for 2017

Answer 1

redetermined overhead rate= 1.3

Step-by-step explanation:

Giving the following information:

In December 2016, Shire Computers management establishes the 2017 predetermined overhead rate based on direct labor cost.

The information used in setting this rate includes estimates that the company will incur $747,500 of overhead costs and $575,000 of direct labor cost in the year 2017.

predetermined overhead rate= total estimated manufacturing overhead/ total amount of allocation base

predetermined overhead rate=747500/ 575000= 1.3