Question

Dallas Company uses a job order costing system. The company's executives estimated that direct labor would be $3,750,000 (250,000 hours at $15/hour) and that factory overhead would be $1,550,000 for the current period. At the end of the period, the records show that there had been 230,000 hours of direct labor and $1,250,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead rate? (Round your answer to two decimal places.)

Answer 1

Answer:

Allocated overhead= $1,430,600

Explanation:

Giving the following information:

The company's executives estimated that direct labor would be $3,750,000 (250,000 hours at $15/hour) and that factory overhead would be $1,550,000 for the current period.

The records show that there had been 230,000 hours of direct labor.

Using direct labor hours as a base.

Predetermined overhead rate= total estimated manfacturing overhead for the period/ total amount of allocation base

Predetermined overhead rate= 1555000/250000= $6.22 per hour

Allocated overhead= Predetermined overhead rate*actual hours= 6.22* 230000= $1,430,600