Question

Midwest Corporation has provided the following data concerning manufacturing overhead for 2020:

Estimated manufacturing overhead for the year $ 37,080
Estimated direct labor hours for the year 2,060

Two jobs were worked on during the year: Job A-101 and Job A-102. The number of direct labor-hours spent on Job A-101 and Job A-102 were 1,230 and 1,600, respectively. The actual manufacturing overhead was $43,600.
What is the predetermined manufacturing overhead rate per direct labor hour for the year?

Answer 1

Estimated manufacturing overhead rate= $18 per direct labor hour

Step-by-step explanation:

Giving the following information:

Estimated manufacturing overhead for the year $ 37,080

Estimated direct labor hours for the year 2,060

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= 37,080/2,060

Estimated manufacturing overhead rate= $18 per direct labor hour