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25 January, 14:21

EB3.

LO 6.1A company estimated 50,000 direct labor hours and $450,000 in overhead. The actual overhead was $445,000, and there were 50,500 direct labor hours. What is the predetermined overhead rate, and how much was applied during the year?

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  1. 25 January, 14:51
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    Predetermined overhead rate=$9

    Applier overhead=$454,500

    Explanation:

    The predetermined overhead rate shall be determined on the basis of the estimated labour hours and shall be calculated using the following formula:

    Predetermined overhead rate=estimated overhead cost/estimated hours

    =450,000/50,000

    =$9 per hour

    Applier overhead=Predetermined overhead rate*Direct labour hours

    =9*50,500

    =$454,500
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