Techniques, Inc. uses a predetermined manufacturing overhead rate based on direc

Question

Techniques, Inc. uses a predetermined manufacturing overhead rate based on direct labor hours to apply its indirect product costs to jobs. The following information has been collected for the previous year:

Techniques used 40,000 direct labor hours and 80,000 machine hours during the previous year. What is the predetermined overhead rate per direct labor hour?

A. $13.00 per hour.

B. $9.10 per hour.

C. $10.40 per hour.

D. $19.50 per hour.

Please show work.

Techniques, Inc. uses a predetermined manufacturing overhead rate based on direct labor hours to apply its indirect product costs to jobs. The following information has been collected for the previous year:

Explanation / Answer

indirect product cost = factory utilities+ depreciation + indirect labour

                                    260000+156000+104000 = 520000

labour hours = 40000

predetermined manufacturing overhead rate on the basis of labour hour = 520000/40000 = 13 per hour

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