Question

Dagnon Corporation uses direct labor-hours in its predetermined overhead rate, At the beginning of the year, the total estimated manufacturing overhead was $299,130. At the end of the year, actual direct labor-hours for the year were 17,400 hours, manufacturing overhead for the year was overapplied by $13,850, and the actual manufacturing overhead was $294,130. The predetermined overhead rate for the year must have been closest to:_____________a) $17.70b) $17.19c) $18.22d) $16.90

Answer 1

a) $17.70

Step-by-step explanation:

The computation of the predetermined overhead rate is shown below:

But before that we need to do the following calculations

Applied manufacturing overheads is

= $13,850 + $294,130

= $307,980

And,

Applied manufacturing overheads is

= predetermined overhead rate × Actual direct labor hours

Hence predetermined overhead rate is

= $307,980 ÷ 174,00 hours

= $17.70

Therefore, the correct option is d. $17.70