Question

Based on this information, the predetermined overhead rate per direct labor dollar for Dept. A is ______.

Company
a) Dept. A
b) Dept B.
Estimated manufacturing overhead
a) $500,000
b) $338,000
c) $162,000
Estimated direct labor cost
a) $250,000
b) $130,000
c) $120,000
Actual manufacturing overhead
a) $720,000
b) $400,000
c) $320,000
Actual direct labor cost
a) $300,000
b) $160,000
c) $140,000
A. $2.50
B. $2.00
C. $2.60
D. $2.40

Answer 1

A. $2.50

The predetermined overhead rate per direct labor dollar for Dept. A is calculated by dividing the estimated manufacturing overhead of $500,000 by the estimated direct labor cost of $250,000, resulting in a rate of $2.00.

Step-by-step explanation:

The student is asking about the predetermined overhead rate per direct labor dollar for Department A within a company.

To find the predetermined overhead rate, we divide the estimated manufacturing overhead by the estimated direct labor cost. Using the provided information, Department A has an estimated manufacturing overhead of $500,000 and an estimated direct labor cost of $250,000.

To calculate the predetermined overhead rate, we use the formula:

Predetermined overhead rate = Estimated manufacturing overhead / Estimated direct labor cost

For Department A:

Predetermined overhead rate = $500,000 / $250,000

This calculation results in a rate of 2.00.

Therefore, the predetermined overhead rate per direct labor dollar for Dept. A is $2.00.