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15 July, 11:48

Sutherland Company listed the following data for 2019:

Budgeted factory overhead $ 2,100,000

Budgeted direct labor hours 89,000

Budgeted machine hours 51,000

Actual factory overhead 2,201,000

Actual direct labor hours 83,700

Actual machine hours 48,900

Assuming Sutherland applied overhead based on direct labor hours, the company's predetermined overhead rate for 2019 is (round to two significant digits) :

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  1. 15 July, 12:09
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    The company's predetermined overhead rate for 2019 is $23,60

    Explanation:

    According to the given data we have the following:

    Budgeted overhead = $2,100,000

    Budgeted direct labor hours = 89,000

    Overhead is applied based on direct labor hour.

    Hence in order to calculate the company's predetermined overhead rate for 2019 we would have to make the following calculation:

    overhead rate per direct labor hour = $2,100,000 / 89,000

    overhead rate per direct labor hour = $23.60

    The company's predetermined overhead rate for 2019 is $23,60
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