Question

MNO Corporation uses a job-order costing system with a pre-determined overhead rate based on direct labor-hours. The company based its pre-determined overhead rate for the current year on the following data: "The pre-determined overhead rate is closest to:_______.A. $8.80 per direct labor-hour.B. $2.00 per direct labor-hour.C. $3.40 per direct labor-hour.D. $5.40 per direct labor-hour.

Answer 1

Answer:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Explanation:

Giving the following information:

MNO Corporation uses a job-order costing system with a predetermined overhead rate based on direct labor-hours.

We don't have the data necessary to calculate the estimated manufacturing overhead rate, but we can provide the formula and an example:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

For example:

Estimated overhead= 150,000

Estimated direct labor hours= 12,000 hours

Estimated manufacturing overhead rate= 150,000/12,000= $12.5 per direct labor hour.