If a firm estimates that for the coming year it will have expected total direct labor costs of $60,000 and total manufacturing overhead costs of $36,000,its overhead application rate will be 60 percent.

Question

Quizplus · Accepted Answer

The overhead application rate is calculated by dividing total manufacturing overhead costs by total direct labor costs. $36,000 / $60,000 = 0.60 or 60%.

If a Firm Estimates That for the Coming Year It