Question

Cortez Consulting, Inc., expects the following costs and expenses during the coming year: Direct labor (@ $12/hr.) $162,000 Sales commissions 37,000 Overhead 202,500 a. Compute a predetermined overhead rate applied on the basis of direct labor hours. Round to two decimal places, if applicable. $Answer

Answer 1

Answer:

$15.00 per direct labor hours

Explanation:

The computation of the predetermined overhead rate is calculated below:

Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated direct labor-hours)

where,

Total estimated manufacturing overhead = $202,500

And, the estimated direct labor hours are

= $162,000 ÷ $12 per hour

= 13,500 direct labor hours

So, the predetermined overhead rate is

= $202,500 ÷ 13,500 direct labor hours

= $15.00 per direct labor hours