Question

Zephyros Corporation had estimated manufacturing overhead costs for the coming year to be $ 306 comma 000 . The total estimated direct labor hours and machine hours for the coming year are 8 comma 000 and 13 comma 000 ​, respectively. Manufacturing overhead costs are allocated based on direct labor hours. What is the predetermined overhead allocation​ rate?

Answer 1

Estimated manufacturing overhead rate= $38.25 per direct labor hour

Step-by-step explanation:

Giving the following information:

Zephyros Corporation had estimated manufacturing overhead costs for the coming year to be $306,000. The total estimated direct labor hours for the coming year are 8,000

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

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

Estimated manufacturing overhead rate= 306,000/8,000= $38.25 per direct labor hour