Q-dot Manufacturing uses a predetermined overhead allocation rate based on direct labor hours. It has provided the following information for the year 2014: Based on the above information, calculate Q-dot's predetermined overhead allocation rate.

Question

Q-dot Manufacturing uses a predetermined overhead allocation rate based on direct labor hours. It has provided the following information for the year 2014:  Based on the above information, calculate Q-dot's predetermined overhead allocation rate.

Quizplus · Accepted Answer

The predetermined overhead allocation rate is calculated by dividing the estimated total manufacturing overhead costs by the estimated total direct labor hours. From the information provided, Q-dot's estimated total manufacturing overhead costs for the year 2014 is $2,000,000 and the estimated total direct labor hours is 100,000. Therefore, the predetermined overhead allocation rate is $20 per direct labor hour (estimated total manufacturing overhead costs/estimated total direct labor hours = $2,000,000/100,000 = $20).

Q-Dot Manufacturing Uses a Predetermined Overhead Allocation Rate Based on Direct