Predetermined Overhead Rate
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Wall Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company's estimated costs for the next year are:
Direct materials 3,000
Direct labor 22,000
Depreciation on factory equipment 7,000
Rent on factory 11,000
Sales salaries 32,000
Factory utilities 16,000
Indirect labor 5,000
It is estimated that 10,000 direct labor hours will be worked during the year. The predetermined overhead rate will be:
7.1
3.9
6.1
9.6
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Solution Summary
This provides the steps to compute the predetermined overhead rate
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