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27 August, 09:45

EA3.

LO 6.1A company estimated 100,000 direct labor hours and $800,000 in overhead. The actual overhead was $805,100, and there were 99,900 direct labor hours. What is the predetermined overhead rate, and how much was applied during the year?

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  1. 27 August, 11:13
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    Predetermined overhead rate=$8 per hour

    Applied overheads=$799,200

    Explanation:

    Predetermined overhead rate is calculated using the following formula:

    Predetermined overhead rate=Estimated overhead/Estimated direct labor hours

    Predetermined overhead rate=800,000/100,000

    =$8 per hour

    Applied overheads = Predetermined overhead rate*number of direct labor hours

    Applied overheads=8*99,900

    =$799,200
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