Moor Company: If overhead is applied to production basis of direct labor cost, what predetermined overhead rate was in effect during the year?

The predetermined overhead rate for machine hours is calculated by dividing the estimated manufacturing overhead cost total by the estimated number of machine hours

Explanation:

if the annual budget is based on a production quantity of 10,000 units and the direct labor required for each unit is three hours, the total direct labor is 10,000 x 3 or 30,000 hours. The total overhead expenditure is then divided by the total labor hours to arrive at the overhead rate.