Question

Lueckenhoff Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $497,000, variable manufacturing overhead of $2.40 per direct labor-hour, and 70,000 direct labor-hours. The company has provided the following data concerning Job T498 which was recently completed: 40 Number of units in the job Total direct labor-hours Direct materials Direct labor cost 80 $ 950 $2,720 The predetermined overhead rate is closest to: Multiple Choice O $11.90 per direct labor-hour O $7:10 per direct labor-hour O $9.50 per direct labor-hour O $2.40 per direct labor-hour

Answer 1

predetermined overhead Rate = total estimated manufacturing overhead / estimated direct labor hours

total estimated manufacturing overhead = fixed manufacturing overhead + variable manufacturing overhead

= 497000+ (direct labor hours * variable manufacturing overhead per hour )

= 497000+(70000*2.4)

= 497000+168000

= 665000

predetermined overhead Rate = 665000/70000

= $9.50 per direct labor hour