Question

Bramble Company provided the following information from its accounting records for 2022:

Expected production 72000 direct labor hours
Actual production 44000 direct labor hours
Estimated overhead $2880000
Actual overhead $1740000

What is the predetermined overhead rate if Bramble Company bases it on direct labor hours?
a.$39.55 per hour
b.$24.17 per hour
c.$65.45 per hour
d.$40.00 per hour

Answer 1

The predetermined overhead rate for Bramble Company, based on direct labor hours, is $40.00 per hour. The correct answer is option d.

Step-by-step explanation:

The predetermined overhead rate is calculated by dividing the estimated overhead cost by the expected production measured in direct labor hours.

In this case, Bramble Company estimated its overhead costs for 2022 to be $2,880,000 and expected production to involve 72,000 direct labor hours.

To find the predetermined overhead rate, you divide $2,880,000 by 72,000 hours, which gives you a rate of $40.00 per hour.