Question

Dallas Company uses a job order costing system. The company's executives estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour) and that factory overhead would be $1,500,000 for the current period. At the end of the period, the records show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead costs. Using direct labor hours as a base, what was the pre-determined overhead rate?a. $6.00 per direct labor hour.b. $750 per direct labor.c. $6.67 per direct labor hour.d. $8.33 per direct labor hour.e. $708 per direct labor.

Answer 1

Answer:

b. $750 per direct labor

Explanation:

Calculation for the what was the predetermined overhead rate

Using this formula

Predetermined overhead rate=Factory overhead / Direct labor hours

Let plug in the formula

Predetermined overhead rate=$1,500,000/$200,000 hours

Predetermined overhead rate= 7.5*100

Predetermined overhead rate=$750 per direct labor

Therefore the predetermined overhead rate will be $750 per direct labor