Question

Lueckenhoff Corporation uses a job-order costing system with a single plant wide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $497,000, variable manufacturing overhead of $2.40 per direct labor hour, and 70,000 direct labor hours. The company has provided the following data concerning job T498 which was recently completed:

Number of units in the job 40

Total direct labor hours 80

Direct materials $950

Direct labor cost $2,720

The predetermined overhead rate is closest to: A.)$9.50 per direct labor hour B.) $11.90 per direct labor hour C.). $2.40 per direct labor hour. D.). $7.10 per direct labor hour

Answer 1

Predetermined overhead rate = ( Estimated fixed manufacturing overhead cost / Estimated direct labor hours ) + Estimated variable manufacturing overhead per direct labor hour = ( 497000 / 70000 ) + 2.40

9.50

per direct labor hour

Option A