The following budget data are available for Howers Company: $$\begin{array} { l r }
\text { Estimated direct labor hours } & 16,000 \
\text { Estimated direct labor dollars } &\$ 170,000 \
\text { Estimated } & \$ 207,200
\end{array}$$
If overhead is to be applied based on direct labor hours,the predetermined overhead rate per hour (rounded)is

Question

The following budget data are available for Howers Company: $$\begin{array} { l r } 
 \text { Estimated direct labor hours } & 16,000 \
\text { Estimated direct labor dollars } &\$ 170,000 \
\text { Estimated } & \$ 207,200
\end{array}$$
 If overhead is to be applied based on direct labor hours,the predetermined overhead rate per hour (rounded)is

Quizplus · Accepted Answer

To calculate the predetermined overhead rate based on direct labor hours, we need to divide the total budgeted overhead cost by the total budgeted direct labor hours.

Total budgeted overhead cost = $388,000 
Total budgeted direct labor hours = 30,000

Predetermined overhead rate per hour = $388,000 / 30,000 = $12.93 (rounded to the nearest cent)

Therefore, the best answer is B ($12.95) because it is the closest to the rounded value of the predetermined overhead rate per hour calculated.

The Following Budget Data Are Available for Howers Company If Overhead Is to Be Applied Based on Direct Labor