Jackson Company estimated that its manufacturing employees would work 88,000 direct labor hours during the current year.During the year,its manufacturing employees actually worked 80,000 direct labor hours.Actual manufacturing overhead costs amounted to $344,000.Jackson applies overhead cost on the basis of direct labor hours.The manufacturing overhead account was overapplied by $16,000 during the current year.Based on this information the predetermined overhead rate was:

Question

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The predetermined overhead rate is calculated by dividing the estimated overhead costs by the estimated direct labor hours. Since the overhead was overapplied by $16,000, the applied overhead was $360,000 ($344,000 actual + $16,000 overapplied). The applied overhead rate is $360,000 / 80,000 hours = $4.50 per hour.

Jackson Company Estimated That Its Manufacturing Employees Would Work 88,000