Question

Daget Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $364,500. At the end of the year, actual direct labor-hours for the year were 24,000 hours, manufacturing overhead for the year was overapplied by $8,420, and the actual manufacturing overhead was $360,220.
The predetermined overhead rate for the year must have been closest to _____.

Answer 1

Answer:

The pre- determined overhead rate for the year is $14.65

Explanation:

The pre- determined overhead rate for the year is computed using the formula which is as:

Pre- determined overhead rate = (Actual manufacturing overhead -  underapplied/overapplied) / Actual direct labor hours

where

Actual manufacturing overhead is $360,220

Manufacturing overhead for the year was overapplied is $8,420

Actual direct labor hours is 24,000

Putting the values above:

Pre- determined overhead rate = ($360,220 - $8,420) / 24,000

Pre- determined overhead rate = $351,800 / 24,000

Pre- determined overhead rate = $14.65