Question

The predetermined overhead rate for manufacturing overhead for 2018 is $4.00 per direct labor hour. Employees are expected to earn $5.00 per hour and the company is planning on paying its employees $100,000 during the year. However, only 75% of the employees are classified as "direct labor." What was the estimated manufacturing overhead for 2018

Answer 1

$60,000= total estimated overhead costs

Step-by-step explanation:

Giving the following information:

The predetermined overhead rate for manufacturing overhead for 2018 is $4.00 per direct labor hour.

Direct labor hour= $5.00 per hour

Direct labor hours= (100,000*0.75)/5= 15,000 hours

To calculate the estimated overhead costs, we need to use the following formula:

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

4= total estimated overhead costs for the period/15,000

$60,000= total estimated overhead costs for the period