The following information pertains to Black Corporation for the current year:
$\begin{array}{llr}
\text { Estmated total overhead costs for the current year} &\$37,500\
\text {Estimated direct labour costs for the current year } &25,000\
\text { Actual direct labour costs} &22,500\
\text { Actual overhead costs } &36,000\
\text { Activity base} &\text { Direct labour cost } &\
\end{array}$
What is the predetermined overhead rate for Black Corporation for the current year?

Question

The following information pertains to Black Corporation for the current year: 
$\begin{array}{llr}
  \text {  Estmated total overhead costs for the current year} &\$37,500\
 \text {Estimated direct labour costs for the current year  } &25,000\
 \text {  Actual direct labour costs} &22,500\
 \text { Actual overhead costs } &36,000\
 \text {  Activity base} &\text { Direct labour cost } &\
\end{array}$
 What is the predetermined overhead rate for Black Corporation for the current year?

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by dividing the estimated total overhead costs by the estimated direct labor costs. Therefore, $ \$37,500 / \$25,000 = 1.5 $ or 150%.

The Following Information Pertains to Black Corporation for the Current