Question

Boaz Company had the following information: Estimated Overhead $ 300,000 Actual Overhead $ 350,000 Estimated labor hours 75,000 Actual labor hours 84,000 What is the predetermined overhead rate if labor hours are used as the allocation base?a. $3.57 per labor-hour
b. $4.00 per labor-hour
c. $4.67 per labor-hour
d. $4.17 per labor-hour

Answer 1

Answer:

b. $4.00 per labor-hour

Explanation:

The computation of the predetermined overhead rate is shown below:

Predetermined overhead rate = Estimated overhead ÷ Estimated labor hours

= $300,000 ÷ 75,000 labor hours

= $4.00 per hour        

By dividing the estimated overhead by the estimated labor hours we can find out the predetermined overhead rate and we did the same in the above calculation