Question

"The predetermined manufacturing overhead rate for the year was 140% of direct labor cost; employees were paid $21.00 per hour. If the estimated direct labor hours were 16,400, what was the estimated manufacturing overhead"?

Answer 1

The estimated manufacturing overhead was $482,160

Step-by-step explanation:

In order to calculate this, we have to find the total labor cost, and calculate 140% of that cost. This is shown below;

employees cost per hour = $21.00

Number of labor hours = 16,400

Therefore, total employee costs = cost per hour × total hours

= 21 × 16,400 = $344,400

Next, we are told that the manufacturing overhead is 140% of the direct labor cost;

140% = 140/100 = 1.4

Therefore, 140% of direct labor cost = 1.4 × 344,400 = $482,160