Question

Chelsea, Inc. uses the job costing method and designates the direct labor hours as the allocation base. In 2016, the total estimated and actual overhead costs for Chelsea, Inc. was $250,000 and $275,000, respectively. The total estimated and actual direct labor hours for chelsea, Inc. was 25,000 and 28,000, respectively. What is the predetermined manufacturing overhead (MOH) rate per direct labor hour (DLH)? (round your answer to the nearest $.01)

Answer 1

The answer is: $10.00

Step-by-step explanation:

To calculate the predetermined manufacturing overhead rate per direct labor hour we must divide the total estimated overhead cost by the total estimated direct labor hours.- $250,000 / 25,000 DLH = $10.00 per DLH.

Instead if we wanted to calculate the real MOH we should divide the real total overhead cost ($275,000) by the real total direct labor hours (28,000) = $9.82