Question

ohansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year: Jameson estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be:

Answer 1

Answer:

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

Explanation:

Giving the following information:

Jameson estimates that 20,000 direct labor-hours will be worked during the year.

We weren't provided with enough information to solve the problem. But, I will provide the formula and a small example.

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

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

Imagine the total estimated overhead costs is $1,500,000.

Predetermined manufacturing overhead rate= 1,500,000/20,000

Predetermined manufacturing overhead rate= $75 per direct labor hour