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givi [52]
4 years ago
9

Dallas Company uses a job order costing system. The company's executives estimated that direct labor would be $2,990,000 (230,00

0 hours at $13/hour) and that factory overhead would be $1,530,000 for the current period. At the end of the period, the records show that there had been 210,000 hours of direct labor and $1,230,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead rate
Business
1 answer:
brilliants [131]4 years ago
8 0

Answer:

Predetermined manufacturing overhead rate= $6.65 per direct labor hour

Explanation:

Giving the following information:

The company's executives estimated that direct labor would be $2,990,000 (230,000 hours at $13/hour) and that factory overhead would be $1,530,000 for the current period.

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

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

Predetermined manufacturing overhead rate= 1,530,000/230,000

Predetermined manufacturing overhead rate= $6.65 per direct labor hour

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