Question

Baka Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $240, 300 and 4, 690 estimated direct labor hours. Actual manufacturing overhead for the year amounted to $243,000 and actual direct labor-hours were 4, 640. The predetermined overhead rate for the year was closest to:____________.

Answer 1

Answer:

$51

Explanation:

Given that,

Total estimated overhead = $240,300

Estimated direct labor hours = 4,690

Actual manufacturing overhead = $243,000

Actual direct labor-hours = 4,640

Hence,

Predetermined overhead rate:

= Total budgeted overhead cost for the year ÷ Total budgeted direct labor hours

= $240,300 ÷ 4,690 estimated direct labor hours

= $51.2367

Therefore, the predetermined overhead rate for the year was closest to $51.