Bakker Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $93,960 and 2,900 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $96,160 and actual direct labor-hours were 2,800.

Question

Nora Escobar

Business

6 May, 07:10

Bakker Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $93,960 and 2,900 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $96,160 and actual direct labor-hours were 2,800.

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Ernesto Cruz · Answer 1

The question is missing the requirement stated below:

The predetermined overhead rate for the year was closest to: (Round your answer to 2 decimal places.)

The predetermined overhead rate is $32.40 / hour

Explanation:

The predetermined overhead rate is given by the below formula:

predetermined overhead rate=total estimated overhead/estimated direct labor hours

From the question, total estimated overhead is $93,960 while estimated direct labor hours is 2900 hours

Predetermined overhead rate=$93960/2900

Predetermined overhead rate=$32.40/hour

However overhead is computed thus:

Actual overhead rate = Actual manufacturing overhead/actual labor hours

Actual overhead rate=$96160/2800

=$34.34/hour