A manufacturer of industrial equipment has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period:
What is the predetermined overhead rate to the nearest cent?

Question

A manufacturer of industrial equipment has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:  The following data pertain to operations for the most recent period:
 What is the predetermined overhead rate to the nearest cent?

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead ÷ Denominator level of activity
= ($56,400 + $100,800) ÷ 8,000 DLHs
= $157,200 ÷ 8,000 DLHs
= $19.65 per DLH

A Manufacturer of Industrial Equipment Has a Standard Costing System