ohansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year: Jameson estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be:

Question

Reed Larson

Business

18 November, 09:31

ohansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year: Jameson estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be:

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Answers (1)

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Alfonso Kirby · Answer 1

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

Explanation:

Giving the following information:

Jameson estimates that 20,000 direct labor-hours will be worked during the year.

We weren't provided with enough information to solve the problem. But, I will provide the formula and a small example.

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

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

Imagine the total estimated overhead costs is $1,500,000.

Predetermined manufacturing overhead rate = 1,500,000/20,000

Predetermined manufacturing overhead rate = $75 per direct labor hour