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4 July, 09:46

LO 4.4How is the predetermined overhead rate determined?

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  1. 4 July, 10:08
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    Instructions are listed below.

    Explanation:

    Giving the following information:

    There is one formula to calculate the estimated manufacturing overhead rate. It is the following:

    Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

    For example:

    Total estimated overhead = $500,000

    Allocation base = direct labor hours

    Total direct labor hours = 50,000

    Estimated manufacturing overhead rate = 500,000/50,000 = $10 per direct labor hours
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