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    Predetermined overhead rate

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

    Direct materials...$5,000
    Direct labor...$19,000
    Rent of factory building...$16,000
    Sales salaries...$24,000
    Depreciation on factory equipment...$7,000
    Indirect labor...$11,000
    Production supervisor's salary...$14,000

    We estimate that 24,000 direct labor hours will be worked during the year. The predetermined overhead rate per hour will be:

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    Solution Preview

    The manufacturing overhead will be all manufacturing costs other than the direct material and direct labor cost. The other manufacturing ...

    Solution Summary

    The solution explains how to calculate the predtermined overhead rate