Question

A company expected its annual overhead costs to be $1,500,000 and direct labor costs to be $1,000,000. Actual overhead was $1,450,000, and actual labor costs totaled $1,100,000. How much is the company’s predetermined overhead rate to the nearest cent?

Answer 1

$1.50

Step-by-step explanation:

Predetermined Overhead Rate = Estimated Manufacturing Overhead Cost / Estimated Units of the Allocation Base for the Period

Predetermined Overhead Rate = $1,500,000 / $1,000,000

Predetermined Overhead Rate = $1.50