Question

Dallas Company uses a job order costing system. The company's executives estimated that direct labor would be $4,590,000 (270,000 hours at $17/hour) and that factory overhead would be $1,570,000 for the current period. At the end of the period, the records show that there had been 250,000 hours of direct labor and $1,270,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead rate? (Round your answer to two decimal places.)

Answer 1

Answer: $5.82 per direct labor hour

Step-by-step explanation:

The predetermined overhead rate will be calculated as:

= Estimated overhead cost / Estimated direct labor hours

= 1570000/270000

= 5.82 per direct labor hour

Therefore, the predetermined overhead rate will be $5.82 per direct labor hour