PROBLEM 2 – JOB ORDER Hickman Company applies manufacturing overhead based on di

Question

PROBLEM 2 – JOB ORDER

Hickman Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for the year follows:

Actual manufacturing overhead                              $118,000

Estimated manufacturing overhead                     $110,000

Direct labor hours incurred                                                 4,800

Direct labor hours estimated                                             5,000

Instructions

(a) Calculate the predetermined overhead rate

Explanation / Answer

predetermined overhead rate=Estimated manufacturing overhead/Direct labor hours estimated

which is equal to

=(110000/5000)

=$22 per Direct labor hour.

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