Answer:
Predetermined overhead rate = $ 9.75 per direct labor hours
Overhead applied = $897,000
Step-by-step explanation:
Given:
Budgeted Overhead cost = $975,000
Actual Overhead cost = $950,000
Budgeted Machine hours = 50,000
Actual Machine hours = 45,000
Budgeted Direct labor hours = 100,000
Actual Direct labor hours = 92,000
Computation:
(a) Predetermined overhead rate.
Predetermined overhead rate = budgeted overhead cost / budgeted direct labor hours
Predetermined overhead rate = $975,000 / 100,000
Predetermined overhead rate = $ 9.75 per direct labor hours
(b) Amount of overhead applied for the year.
Overhead applied = Actual hours × Predetermined overhead rate
Overhead applied = 92000 × $9.75
Overhead applied = $897,000