Answer:
$10.60 per direct labor hour
Explanation:
Calculation for the overhead rate
First step is to calculate the Direct labor hours for car wheels using this formula
Direct labor hours for car wheels = Estimated wheel produced * Direct labor hour per wheel
Let plug in the formula
Direct labor hours for car wheels= 40,000 * 1
Direct labor hours for car wheels= 40,000 hours
Second step is to calculate Direct labor hours for Truck wheels using this formula
Direct labor hours for Truck wheels = Estimated wheel produced * Direct labor hour per wheel
Let plug in the formula
Direct labor hours for Truck wheels= 10,000 * 3
Direct labor hours for Truck wheels= 30,000 hours
Third step is to calculate the Total direct labor hours
Total direct labor hours = 40,000 + 30,000
Total direct labor hours=70,000 hours
Now let calculate the Overhead rate using this formula
Overhead rate = Total estimated overhead costs / Total direct labor hours
Overhead rate= $742,000 / 70,000 hours
Overhead rate= $10.60 per direct labor hour
Therefore Overhead rate is $10.60 per direct labor hour
