Question

Purves Corporation is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $121,000 and 10,000 direct labor-hours for the period. The company incurred actual total fixed manufacturing overhead of $113,000 and 10,900 total direct labor-hours during the period. The predetermined overhead rate is closest to:

Answer 1

Answer:

The predetermined overhead rate is closest to $12.10 per hour

Explanation:

Predetermined overhead rate = (Estimated total fixed manufacturing overhead / Estimated direct labor hours)  

Predetermined overhead rate =($121,000 / 10,000)

Predetermined overhead rate = $12.10 per hour