Question

Pineapple International uses a job order costing system. Pineapple's accounting manager estimated that direct labor would be $2,990,000 (230,000 hours at $13/hour) and that factory overhead would be $1,530,000 for the current period. At the end of the period, 210,000 hours of direct labor and $1,230,000 of actual overhead costs were recorded. Determine the predetermined overhead rate using direct labor hours as a base. (Round your answer to two decimal places.) g

Answer 1

$6.65 per hour

Step-by-step explanation:

We can determine the predetermined overhead rate by

Estimated factory overhead cost / Estimated number of direct labor hours.

Estimated factory overhead cost = $1,530,000

Estimated number of direct labor hours = 230,000 hours

= $1,530,000 / 230,000

= $6.65 per hour

Predetermined overhead rate is $6.65 per hour