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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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ijaz4308

Answer:

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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