Question

E3-20A (similar to) EQuestion Help Mansfield Heating & Cooling installs and services commercial heating and cooling systems. Mansfield uses job costing to In September, Mansfield started and completed the following two jobs: calculate the cost of its jobs. Overhead is allocated to each job based on the number of direct labor hours spent on that job. At the beginning of the current year, Mansfield estimated that its overhead for the coming year would be $66,400. It also anticipated using 4,150 direct labor hours for the year EEB (Click the icon to view the jobs.) Mansfield paid a $34-per-hour wage rate to the employees who worked on these two jobs. Read the requirements Requirement 1. What is Mansfield's predetermined overhead rate based on direct labor hours? Data Table Determine the formula to calculate Mansfield's predetermined overhead rate based on direct labor hours, then calculate the rate. - Predetermined overhead rate Job 101 Job 102 Estimated yearly direct labor hours Estimated yearly overhead coets Total direct laborJob 101 Total direct laborJob 102 Total direct materials-Job 101 Total direct materials-Job 102 Direct materials used S 17,000 13,500 Direct labor hours used 175 78 PrintDone

Answer 1

Predetermined overhead rate: Rate os the overheads calculated on the bases of the cost driver to assign the manufacturing overheads incurred during the Production.

For the above Problem,

A cost driver is the Direct Labor Hour

Formula:

Predetermined Overhead Rate

= Estimated Yearly overhead cost / Estimated Yearly Direct Labor hours

Calculation :

Estimated Overheads: $ 66,400

Estimated Labor hours: 4,150

Predetermined Overhead Rate = $66,400 /4150 = $ 16