Question

Prestige Builders builds large family homes. The budgeted direct labor hours for the coming year are 12,000 hours and the budgeted MOH for the same time period is $96,000. What is the predetermined MOH rate for the coming year?

Answer 1

The predetermined MOH rate for the coming year is $8/hour.

Step-by-step explanation:

To calculate the predetermined MOH rate, divide the budgeted MOH by the budgeted direct labor hours. In this case, the budgeted MOH is $96,000 and the budgeted direct labor hours are 12,000. So, the predetermined MOH rate for the coming year is $96,000/12,000 hours = $8/hour.