At the beginning of the year, Titanium Inc.estimated that overhead would be $100,000 and direct labor hours would be 20,000.At the end of the year, actual overhead was $175,900 and there were actually 35,000 direct labor hours.
What is the predetermined overhead rate?
A) $5 per direct labor hour
B) $3 per direct labor hour
C) $4 per direct labor hour
D) $6 per direct labor hour
E) None of these are correct.

Question

At the beginning of the year, Titanium Inc.estimated that overhead would be $100,000 and direct labor hours would be 20,000.At the end of the year, actual overhead was $175,900 and there were actually 35,000 direct labor hours.  
What is the predetermined overhead rate? 
A) $5 per direct labor hour
B) $3 per direct labor hour
C) $4 per direct labor hour
D) $6 per direct labor hour
E) None of these are correct.

Quizplus · Accepted Answer

Predetermined Overhead Rate = Estimated Annual Overhead / Estimated Annual Activity Level = $100,000 / 20,000 direct labor hours = $5 per direct labor hour

At the Beginning of the Year, Titanium Inc