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E3-21A (similar to) Question Help Lakeview Industries uses job costing to calculate the costs of its jobs with direct labor cost as its manufacturing overhead allocation base 1 (Click the loon to view additional information.) Read the requirements. More Info The company manufactures a variety of engines for use in farm equipment. At the beginning of the current year, Lakeview estimated that its overhead for the coming year would be $324,800. It also anticipated using 29,000 direct labor hours for the year. Lakeview pays its employees an average of $28 per direct labor hour Lakeview just finished Job 371, which consisted of two engines for a farm Requirement 1. What is Lakeviews predetermined manufacturing overhead rate based on direct labor (DL) cost? Determine the formula to calculate Lakeviews predetermined overhead rate based on direct labor costs, then calculate the rate. Predetermined overhead rate - equipment manufacturer. The costs and hours for this job consisted of $15,500 in direct materials used and 160 direct labor hours. Estimated yearly direct labor cost Estimated yearly direct labor hours Estimated yearly overhead costs. Total direct laborlob 371 Total direct materials--Job 371 PrintDone Choose from any drop-down list and then click Check Answer. Clear All Check Answer remaining

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Answer #1

Direct labor cost = Direct labor hours x Direct labor rate

= 29,000 x 28

= $812,000

Estimated yearly overhead costs = $324,800

Pre-determined overhead rate = Estimated yearly overhead costs/Direct labor cost

= 324,800/812,000

= 40%

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