Rolling Hills Construction
Rolling Hills Construction Co. assigns overhead to specific jobs based on direct labour cost (dollars). The following information is available for the month of June:
$$\begin{array} { l l }
\text { Estimated direct labour hours } & 2000 \text { hours } \
\text { Estimated direct labour cost per hour } & \$ 12 / \text { hour } \
\text { Estimated overhead costs } & \$ 3000 \
\text { Actual direct labour hours } & 2300 \text { hours } \
\text { Actual direct labour cost per hour } & \$ 13 \text { hour } \
\text { Actual overhead costs } & \$ 3300
\end{array}$$
-The predetermined overhead rate for the month of June is:

Question

Rolling Hills Construction
Rolling Hills Construction Co. assigns overhead to specific jobs based on direct labour cost (dollars). The following information is available for the month of June:
$$\begin{array} { l l } 
\text { Estimated direct labour hours } & 2000 \text { hours } \
\text { Estimated direct labour cost per hour } & \$ 12 / \text { hour } \
\text { Estimated overhead costs } & \$ 3000 \
\text { Actual direct labour hours } & 2300 \text { hours } \
\text { Actual direct labour cost per hour } & \$ 13 \text { hour } \
\text { Actual overhead costs } & \$ 3300
\end{array}$$
-The predetermined overhead rate for the month of June is:

Quizplus · Accepted Answer

The predetermined overhead rate is calculated based on the estimated costs, not the actual costs. It is found by dividing the estimated overhead costs by the estimated direct labor cost. The estimated direct labor cost is 2000 hours * $12/hour = $24,000. Therefore, the predetermined overhead rate is $3000 / $24,000 = $0.125 per direct labor dollar.

Rolling Hills Construction Rolling Hills Construction Co -The Predetermined Overhead Rate for the Month of June Is

Rolling Hills Construction
Rolling Hills Construction Co -The Predetermined Overhead Rate for the Month of June Is