Final answer:
To calculate the predetermined overhead allocation rate, divide the total estimated indirect costs, which are $192,000, by the total direct labor hours, which are 12,000 hours. The predetermined overhead allocation rate is $16 per direct labor hour.
Step-by-step explanation:
The student wants to determine Blake Accounting's predetermined overhead allocation rate. The predetermined overhead rate is calculated based on estimates of total indirect costs for a specific period and a chosen allocation base, which in this case is direct labor hours.
Step 1: Identify Total Indirect Costs
According to the information provided, Blake Accounting's estimated total indirect costs for the year 2016 are $192,000.
Step 2: Identify Total Direct Labor Hours
The total direct labor hours expected by accountants at Blake Accounting for the year are 12,000 hours.
Step 3: Calculate Predetermined Overhead Rate
To calculate the predetermined overhead rate, you divide the total estimated indirect costs by the total direct labor hours. Using the provided figures:
Predetermined Overhead Rate = Total Indirect Costs / Total Direct Labor Hours
Predetermined Overhead Rate = $192,000 / 12,000 hours
Predetermined Overhead Rate = $16 per direct labor hour
Therefore, Blake Accounting's predetermined overhead allocation rate is $16 per direct labor hour.