Question

Peter Heating/Cooling installs and services commercial heating and cooling systems. Peter uses job costing to calculate the cost of its jobs. Overhead is allocated to each job based on the number of direct labor hours spent on that job. Peter estimated that its overhead for the coming year would be $63,750. It also anticipated using 4,250 direct labor hours for the year.What is the predetermined overhead rate based on direct labor hours?

Answer 1

Overhead rate = $15 per direct labor hour

Step-by-step explanation:

given data

overhead for the coming year = $63,750

direct labor hours = 4,250

solution

we get here Estimated manufacturing overhead rate that is express as

Overhead rate = total estimated overhead costs for the period ÷ total amount of allocation base .....................1

put here value

Overhead rate =
`(63750)/(4250)`

Overhead rate = $15 per direct labor hour