Question

Dunder Mifflin Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $300,000. At the end of the year, actual direct labor-hours for the year were 24,000 hours, manufacturing overhead for the year was overapplied by $10,000, and the actual manufacturing overhead was $350,000. The predetermined overhead rate for the year must have been closest to:

Answer 1

The predetermined overhead rate for the year must have been closest to $15

Step-by-step explanation:

The computation of the predetermined overhead rate is shown below:

Predetermined overhead rate = (Total actual manufacturing overhead) ÷ (actual direct labor-hours)

where,

Total actual manufacturing overhead = Actual manufacturing overhead + overhead over applied

= $350,000 + $10,000

= $360,000

And, the actual direct labor-hours is 24,000 hours

Now put these values to the above formula

So, the rate would equal to

= $360,000 ÷ 24,000 hours

= $15