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The predetermined overhead rate for manufacturing overhead for 2020 is $5.00 per direct labor hour. Employees...

The predetermined overhead rate for manufacturing overhead for 2020 is $5.00 per direct labor hour. Employees are expected to earn $8.00 per hour and the company is planning on paying its employees $220,000 during the year. However, over 80% of the employees are classified as "direct labor". What was the estimated manufacturing overhead for 2020?

a. $211,200

b. $176,000

c. $137,500

d. 110,000

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Answer #1

Answer is d. 110,000

Estimated Manufactuing overhead = Total Direct labor hour * Overhead Rate

Total Labor hour =$2200000/$8 =27500 hours

Direct labor hour =27500 hours * 80%= 22000 hours

Hence Estimated Manufactuing overhead =22000 hours * $5 =$110000

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