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Techniques, Inc. uses a predetermined manufacturing overhead rate based on direct labor hours to apply its...

Techniques, Inc. uses a predetermined manufacturing overhead rate based on direct labor hours to apply its indirect product costs to jobs. The following information has been collected for the previous year: dir material 150K, dir labor 200K, indirect labor 50K sales commission 25K, depreciation on factory 75K utilites - factory 125K, rent on office bldg 25K guards at office building 25K depreciation on office bldg. 30K Techniques used 25,000 direct labor hours and 50,000 machine hours during the previous year. What is the predetermined overhead rate per direct labor hour?

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computation pre determined OVERHEAD rate per direct labour hour

   PRE DETERMINED OVERHEAD rate = Manufacturing OVERHEAD cost/direct labour hour

Manufacturing OVERHEAD cost is indirect cost that incurred during production or Manufacturing process

   = (Indirect labour +depreciation on factory building+utilities factory)/direct labour hour

   =( 50k +75k+125k)/25000

= 250k/25000

= 10

PRE DETERMINED OVERHEAD rate = 10

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