Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs.The Corporation has provided the following estimated costs for the next year: Jameson estimates that 20,000 direct labor-hours will be worked during the year.The predetermined overhead rate per hour will be:

A) $2.50 per direct labor-hour
B) $2.79 per direct labor-hour
C) $3.00 per direct labor-hour
D) $4.00 per direct labor-hour

Question

Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs.The Corporation has provided the following estimated costs for the next year:

Jameson estimates that 20,000 direct labor-hours will be worked during the year.The predetermined overhead rate per hour will be:

A) $2.50 per direct labor-hour
B) $2.79 per direct labor-hour
C) $3.00 per direct labor-hour
D) $4.00 per direct labor-hour

Anthony Pruitt · Accepted Answer

Final Answer : A, Explanation :    Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation basePredetermined overhead rate = $50,000 ÷ 20,000 direct labor-hours = $2.50 per direct labor-hour

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