Question

Daguio corporation uses direct labor hours in its predetermined overhead rate. at the beginning of the year, the total estimated manufacturing overhead was $224,580. At the end of the year actual direct labor hours for the year were 18,200 hours manufacturing overhead for the year was under applied by 12,100, and the actual manufacturing overhead was $219,580. The predetermined overhead rate for the year must have been closest to:_____

Answer 1

$11.40 per direct labor-hour

Step-by-step explanation:

Calculation for predetermined overhead rate for the year must have been closest to

First step is to calculate the Manufacturing overhead applied using this formula

Manufacturing overhead applied = Actual overhead - Underapplied overhead

Let plug in the formula

Manufacturing overhead applied=$219,580 - $12,100

Manufacturing overhead applied= $207,480

Now let calculate the Predetermined overhead rate using this formula

Predetermined overhead rate = Estimated total manufacturing overhead / Estimated total amount of the allocation base

Let plug in the formula

Predetermined overhead rate = $207,480 / 18,200 direct labor-hours

Predetermined overhead rate = $11.40 per direct labor-hour

Therefore The predetermined overhead rate for the year must have been closest to:$11.40 per direct labor-hour