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: Direct materials $ 6,000 Direct labor $ 20,000 Rent on factory building $ 15,000 Sales salaries $ 25,000 Depreciation on factory equipment $ 8,000 Indirect labor $ 12,000 Production supervisor's salary $ 15,000 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:

The right solution is "$ 2.50 per DLH".

Explanation:

The given values are:

Rent,

= $ 15,000

Factor equipment's depreciation,

= $ 8,000

Indirect labor,

= $ 12,000

Production supervisor's salary,

= $ 15,000

Estimated DLHs,

= 20,000

The total manufacturing overhead will be:

= $Rent+Factory's \ equipment \ depreciation+Indirect \ labor+Production \ supervisor's \ salary$On substituting the given values, we get

= $15000+8000+12000+15000$

= $50,000$ ($)

Now,

The predetermined overhead rate will be:

=  $\frac{50000}{20000}$

= $2.50 \ per \ DLH$ ($)