Question

Neutronics makes four different models of gas identifiers. Next year, the company anticipates total overhead costs of $2.5 million. It also anticipates a combined 75,000 direct labor hours across all of its production lines. If Neutronics uses direct labor hours to allocate its overhead costs, the company’s predetermined overhead rate should be ________ per hour.

Answer 1

$33.33

Step-by-step explanation:

The computation of the predetermined overhead rate is shown below: In this question, we have to apply the formula that is presented below:

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

= $2,500,000 ÷ 75,000 direct labors hours

= $33.33

Simply we divide the anticipates total overhead by the anticipated direct labor hours