A company expected its annual overhead costs to be $1500000 and direct labor costs to be $1000000. Actual overhead was $1450000 and actual labor costs totaled $1100000. How much is the company's predetermined overhead rate to the nearest cent?

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by dividing the expected overhead costs by the expected direct labor costs. So, $1,500,000 / $1,000,000 = $1.50.

A Company Expected Its Annual Overhead Costs to Be $1500000