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natta225 [31]
3 years ago
13

Bridge Building Company estimates that it will incur $1,200,000 in overhead costs for the year. Additionally, the company estima

tes 50,000 direct labor hours will be spent building custom walking bridges for the year at a total direct labor cost of $600,000. What is the predetermined overhead rate for Bridge Building Company if direct labor costs are to be used as an allocation base?
Business
1 answer:
Vaselesa [24]3 years ago
7 0

Answer:

Predetermined manufacturing overhead rate= $2 per direct labor dollar

Explanation:

Giving the following information:

Estimated overhead cost= $1,200,000

Estimated direct labor cost= $600,000.

<u>To calculate the predetermined overhead rate, we need to use the following formula:</u>

<u></u>

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

Predetermined manufacturing overhead rate= 1,200,000 / 600,000

Predetermined manufacturing overhead rate= $2 per direct labor dollar

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