Branin Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $160,000, variable manufacturing overhead of $3.40 per direct labor - hour, and 80,000 direct labor-hours. The company has provided the following data concerning Job A578 which was recently completed: total labor hours: 250. Direct materials: $715. Direct labor cost: $9000.

The predetermined overhead rate is closest to:

a. $8.80 per direct labor-hour

b. $2.00 per direct labor-hour

c. $3.40 per direct labor-hour

d. $5.40 per direct labor-hour

Question

Business

Donte

2 June, 17:08

Branin Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $160,000, variable manufacturing overhead of $3.40 per direct labor - hour, and 80,000 direct labor-hours. The company has provided the following data concerning Job A578 which was recently completed: total labor hours: 250. Direct materials: $715. Direct labor cost: $9000.

The predetermined overhead rate is closest to:

a. $8.80 per direct labor-hour

b. $2.00 per direct labor-hour

c. $3.40 per direct labor-hour

d. $5.40 per direct labor-hour

+3

Answers (2)

Know the Answer?

Dominick Mckinney · Answer 1

Predetermined overhead rate based on direct labor-hours is $5.4

Explanation:

To calculate predetermined overhead rate based on direct labor-hours the first thing we have to do is to divide fixed manufacturing overhead cost over the estimated labor hours ($160,000/80,000 hours), then we have to add the variable manufacturing overhead in this case $3.40 per hour

So predetermined overhead rate is (160,000/80,000) + 3.4=$5.4 per direct labor-hour

Elyse Medina · Answer 2

d. $5.40 per direct labor-hour

Explanation:

The predetermined overhead rate = (total fixed manufacturing overhead cost + total variable manufacturing overhead) / Total Direct Labor Hours

= [$ 160,000 + ($3.40 per direct labor - hour * 80,000 direct labor-hours) ] / 80,000 direct labor Hour

= [$ 160,000 + $ 272,000 ] / 80,000 direct labor Hour

= $ 432,000 / 80000 direct labor Hour

= $ 5.40 per direct labor Hour