Question

You are provided the following data: Total estimated manufacturing overhead cost of $28,000 (consisting of $13,000 fixed and $15,000 variable) Estimated total allocation base of 7,500 direct labor hours Calculate the predetermined overhead rate:

Answer 1

$3.73 per direct labor-hour

Step-by-step explanation:

The computation of the predetermined overhead rate is shown below:

= (Total estimated manufacturing overhead) ÷ (estimated direct labor-hours)

where,

Total estimated manufacturing overhead = Total fixed manufacturing overhead cost + variable manufacturing overhead cost

= $13,000 + $15,000

= $28,000

And, the direct labor hour is 7,500

So, the predetermined overhead rate is

= $28,000 ÷ 7,500 direct labor hours

= $3.73 per direct labor-hour