Question

Dehner Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on...

Dehner Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data:

Total direct labor-hours 40,000
Total fixed manufacturing overhead cost $ 96,000
Variable manufacturing overhead per direct labor-hour $ 3.00

Recently, Job P951 was completed with the following characteristics:

Number of units in the job 20
Total direct labor-hours 100
Direct materials $ 755
Direct labor cost $ 4,000

The predetermined overhead rate is closest to:

  • $2.40 per direct labor-hour

  • $5.40 per direct labor-hour

  • $3.00 per direct labor-hour

  • $8.40 per direct labor-hour

Need fast response please

Homework Answers

Answer #1

Ans. Option 2nd. $5.40 per direct labor-hour

Working notes:

Calculation of variable manufacturing overhead cost:

Variable overhead cost = Variable overhead cost per direct labor hour * Estimated direct labor hours

= $3.00 * 40,000

= $120,000

*Calculation of total estimated overhead cost:

Total estimated overhead cost = Variable overhead cost + Fixed overhead cost

= $120,000 + $96,000

= $216,000

*Calculation of predetermined overhead rate:

Predetermined overhead rate = Total estimated overhead cost / Estimated direct labor hours

= $216,000 / 40,000

= $5.40 per direct labor-hour

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