Question

Carey Company applies manufacturing overhead costs to products as a percentage of direct labor dollars. Estimated and actual values of manufacturing overhead and direct labor costs are summarized here: Estimated Actual Direct labor cost $ 330,000 $ 280,000 Manufacturing overhead 653,400 578,400 Required: Compute the predetermined overhead rate.

Answer 1

Answer:

198%

Explanation:

The computation of the predetermined overhead rate is shown below:

Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated direct labor cost)  × 100

= ($653,400 ÷ 330,000) × 100

= 198%

We simply divide the total estimated manufacturing overhead by the estimated direct labor cost so that the predetermined overhead rate can come