Question

multiple choice question
estimated manufacturing overhead $900,000
estimated direct labor cost $250,000
actual manufacturing overhead $720,000
actual direct labor cost $300,000
based on this information, the predetermined overhead rate per direct labor dollar is:
○ $2.40
○ $1.67
○ $3.00
○ $2.88

Explanation:

Step1: Identify relevant values

Predetermined overhead rate uses estimated values: Estimated manufacturing overhead = $\$500,000$, Estimated direct labor cost = $\$250,000$

Step2: Calculate overhead rate

Divide estimated overhead by estimated labor cost.
$\text{Predetermined overhead rate} = \frac{\text{Estimated manufacturing overhead}}{\text{Estimated direct labor cost}} = \frac{500000}{250000} = 2.00$

Answer:

$2.00$ (Option C)