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

Quizplus · Accepted Answer

To determine the predetermined overhead rate per hour, we need to divide the estimated overhead costs by the estimated direct labor hours.

Predetermined overhead rate = Estimated overhead costs / Estimated direct labor hours

From the given budget data, we can see that the estimated overhead costs are $155,400 and the estimated direct labor hours are 12,000.

Predetermined overhead rate = $155,400 / 12,000 = $12.95 (rounded)

Therefore, the best choice is B, $12.95.

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