Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs.The Corporation has provided the following estimated costs for the next year: Jameson estimates that 20,000 direct labor-hours will be worked during the year.The predetermined overhead rate per hour will be:
A)$2.50 per direct labor-hour
B)$2.79 per direct labor-hour
C)$3.00 per direct labor-hour
D)$4.00 per direct labor-hour

Question

Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs.The Corporation has provided the following estimated costs for the next year:  Jameson estimates that 20,000 direct labor-hours will be worked during the year.The predetermined overhead rate per hour will be:
A)$2.50 per direct labor-hour 
B)$2.79 per direct labor-hour 
C)$3.00 per direct labor-hour 
D)$4.00 per direct labor-hour

Quizplus · Accepted Answer

11ea7998_5f4d_1bde_911b_e79806b75b82_TB2627_00_TB2627_00 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base
Predetermined overhead rate = $50,000 ÷ 20,000 direct labor-hours = $2.50 per direct labor-hour

Johansen Corporation Uses a Predetermined Overhead Rate Based on Direct