Question

MC Qu. 120 Dallas Company uses a job order... Dallas Company uses a job order costing system. The company's executives estimated that direct labor would be $2,640,000 (220,000 hours at $12/hour) and that factory overhead would be $1,520,000 for the current period. At the end of the period, the records show that there had been 200,000 hours of direct labor and $1,220,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead rate

Answer 1

Answer:

$6.91 per direct labor hour

Explanation:

Given that,

Estimated direct labor = $2,640,000

Estimated direct labor hours = 220,000

Factory overhead = $1,520,000

Actual overhead costs = $1,220,000

Therefore,

Predetermined overhead rate:

= Estimated overhead cost ÷ Estimated direct labor hours

= $1,520,000 ÷ 220,000 hours

= $6.91 per direct labor hour