Manufacturing overhead was estimated to be $500,000 for the year along with 20,000 direct labor hours.Actual manufacturing overhead was $450,000 and actual direct labor hours were 19,000.The predetermined overhead rate per direct labor hour would be:

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated based on the estimated costs and estimated activity levels at the beginning of the period. It is calculated as estimated manufacturing overhead divided by estimated direct labor hours, which is $500,000 / 20,000 hours = $25.00 per direct labor hour.

Manufacturing Overhead Was Estimated to Be $500,000 for the Year