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11 August, 23:46

White Company is a consulting firm and applies indirect overhead costs based on billing hours. The firm expects to have $102,000 in indirect costs during the year and bill customers for 8,500 hours. The cost of direct labor is $60 per hour. What is the predetermined overhead allocation rate for White Company?

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  1. 12 August, 00:04
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    predetermined overhead allocation rate is 12 per direct labor hour

    Explanation:

    given data

    indirect costs = $102000

    labor time = 8500 hours

    cost of labor = $60 per hour

    to find out

    predetermined overhead allocation rate

    solution

    we find here predetermined overhead allocation rate by given formula that is

    predetermined overhead allocation rate = indirect costs / labor time ... 1

    put here value in equation 1 to get rate

    predetermined overhead allocation rate = indirect costs / labor time

    predetermined overhead allocation rate = 102000 / 8500

    predetermined overhead allocation rate = 12

    so predetermined overhead allocation rate is 12 per direct labor hour
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Home » Business » White Company is a consulting firm and applies indirect overhead costs based on billing hours. The firm expects to have $102,000 in indirect costs during the year and bill customers for 8,500 hours. The cost of direct labor is $60 per hour.
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