Question

EB3.

LO 6.1A company estimated 50,000 direct labor hours and $450,000 in overhead. The actual overhead was $445,000, and there were 50,500 direct labor hours. What is the predetermined overhead rate, and how much was applied during the year?

Answer 1

Predetermined overhead rate=$9

Applier overhead=$454,500

Step-by-step explanation:

The predetermined overhead rate shall be determined on the basis of the estimated labour hours and shall be calculated using the following formula:

Predetermined overhead rate=estimated overhead cost/estimated hours

=450,000/50,000

=$9 per hour

Applier overhead=Predetermined overhead rate*Direct labour hours

=9*50,500

=$454,500