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 predetermined overhead rate?

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12 October, 15:20

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Isai Mcmahon · Answer 1

The predetermined over head rate was 1,500,000/200,000=$7.5 of overhead charges per hour of labor