Daget Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $364,620. At the end of the year, actual direct labor-hours for the year were 24,000 hours, manufacturing overhead for the year was overapplied by $8,540, and the actual manufacturing overhead was $360,580.

The predetermined overhead rate for the year must have been closest to $___ per direct labor-hour.

Question

Business

Jonathan Carson

4 January, 17:09

Daget Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $364,620. At the end of the year, actual direct labor-hours for the year were 24,000 hours, manufacturing overhead for the year was overapplied by $8,540, and the actual manufacturing overhead was $360,580.

The predetermined overhead rate for the year must have been closest to $___ per direct labor-hour.

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Answers (1)

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Wong · Answer 1

The predetermined overhead rate for the year must have been closest to $15.38 per direct labor-hour.

Explanation:

Estimated Overhead = $364,620

Actual Labor hours = 24,000 hours

Over applied overhead = Applied overhead - Actual overhead

$8,540 = Applied overhead - $360,580

Applied overhead = $8540 + $360,580 = $369,120

Applied overhead = Actual Labor hours x Predetermined overhead rate

$369,120 = 24,000 x Predetermined overhead rate

Predetermined overhead rate = $369,120 / 24,000 = $15.38 per labor hour