Question

Clay Co. produces ceramic coffee mugs and pencil holders. Manufacturing overhead is assigned to production using an application rate based on direct labor hours. Required: a. For 2013, the company's cost accountant estimated that total overhead costs incurred would be $461,100 and that a total of 53,000 direct labor hours would be worked. Calculate the amount of overhead to be applied for each direct labor hour worked on a production run. (Round your answer to 2 decimal places.)

Answer 1

Predetermined manufacturing overhead rate= $8.7 per direct labor hour

Step-by-step explanation:

Giving the following information:

Estimated that total overhead costs= $461,100

Estimated total direct labor hours= 53,000

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 461,100 / 53,000

Predetermined manufacturing overhead rate= $8.7 per direct labor hour