Question

lighting, inc. uses direct labor hours as a basis for allocating overhead. next year's estimated total overhead is $180000 and direct labor hours are predicted to be $30000 hours. the average labor cost is $10 per. what is the predetermined overhead rate

Answer 1

The predetermined overhead rate is calculated as follows:

Predetermined overhead rate = Estimated total overhead / Estimated total direct labor hours

In this case, the estimated total overhead is $180,000, and the estimated total direct labor hours are 30,000. Therefore:

Predetermined overhead rate = $180,000 / 30,000 hours

Predetermined overhead rate = $6 per direct labor hour

So, the predetermined overhead rate is $6 per direct labor hour.