The following budget data are available for Sharp Company: Estimated direct labor hours 12,000 Estimated direct labor dollars $90,000 Estimated factory overhead costs $179,000 Actual direct labor hours 11,500 Actual direct labor dollars $92,000 Actual factory overhead costs $180,000.

If factory overhead is to be applied based on direct labor dollars, the predetermined overhead rate is

a. 199%

b.$15.65

c.$14.92

d. 196%

The correct anser is A. $1.99 per direct labor dollar.

Explanation:

Giving the following information:

Estimated direct labor dollars $90,000

Estimated factory overhead costs $179,000

To calculate the estimated manufacturing overhead rate we need to use the following formula:

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

Estimated manufacturing overhead rate = 179,000/90,000 = $1.99 per direct labor dollar.