Question

The following information is related to Alpha Company:

Estimated manufacturing overhead costs for the year $249,000
Actual manufacturing overhead costs for the year $199,000
Estimated direct labor hours for the year 50,000
Actual direct labor hours for the year 34,000

Alpha uses normal costing and applies overhead on the basis of direct labor hours. The predetermined overhead rate of Alpha Company is:________

a. $7.3 per hour.
b. $4.0 per hour.
c. $5.1 per hour.
d. $8.8 per hour.

Answer 1

c. $5.1 per hour.

Step-by-step explanation:

Estimated Manufacturing overhead = $249,000

Estimated direct labour hours = 50,000

Predetermined overhead Rate = Estimated Manufacturing overhead / Estimate direct labor hours

Predetermined overhead Rate = $249,000 / 50,000

Predetermined overhead Rate = $4.98

The given is inconsistent with the options given in this question. A similar question is attached with this answer. The following answer is made according to the attached question. please find that.

Estimated Manufacturing overhead = $254,000

Estimated direct labour hours = 50,000

Predetermined overhead Rate = Estimated Manufacturing overhead / Estimate direct labor hours

Predetermined overhead Rate = $254,000 / 50,000

Predetermined overhead Rate = $5.08 = $5.1 per hour