Question

Shire Computer's predetermined overhead rate is based on direct labor cost. Management estimates the company will incur $663,000 of overhead costs and $510,000 of direct labor cost for the year. During March, Shire began and completed Job 13-56. 1. What is the predetermined overhead rate for the year? 2. Use the information on the following job cost sheet to determine the total cost of the job. Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the predetermined overhead rate for the year? Overhead Rate Choose Denominator: Choose Numerator: Overhead Rate Overhead rate 1 Required Required 2 >

Answer 1

Requirement 1:

Overhead Rate
Estimated Overhead Cost	/	Estimated labor cost	=	Overhead rate
$663,000	/	$510,000	=	1.30

Explanation:

Overhead rate = Estimated Overhead / Estimated labor cost

= $663,000 / $510,000

=$1.30