Question

Martin Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for the year follows.

Actual manufacturing overhead = $150,000
Estimated manufacturing overhead = $145,000
Direct labor hours incurred = 4,800
Direct labor hours estimated = 5,000
Compute the predetermined overhead rate.

Answer 1

the predetermined overhead rate is $29 per direct labor hour

Step-by-step explanation:

The computation of the predetermined overhead rate is shown below:

Predetermined overhead rate = Estimated manufacturing overhead ÷ estimated direct labor hours

= $145,000 ÷ 5,000 direct labor hours

= $29 per direct labor hour

Hence, the predetermined overhead rate is $29 per direct labor hour