Minton Company provided the following information from its accounting records for 2013: Expected production 60,000 labor hours Actual production 56,000 labor hours Budgeted overhead $1,500,000 Actual overhead $1,450,000 How much is the overhead application rate if Minton Company bases it on direct labor hours?

Estimated manufacturing overhead rate = $25 per direct labor hour

Explanation:

Giving the following information:

Expected production 60,000 labor hours Actual production 56,000 labor hours Budgeted overhead $1,500,000 Actual overhead $1,450,000.

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

Estimated manufacturing overhead rate = 1500000 / 60000 = $25 per direct labor hour