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Company XYZ uses direct labor hours to allocate its manufacturing overhead. The company estimates that total...

Company XYZ uses direct labor hours to allocate its manufacturing overhead. The company estimates that total direct labor hours to be operated next year are 250,000 hours. The estimated variable overhead is OMR7 per hour and the estimated fixed overhead costs are OMR750,000. Calculate the predetermined overhead rate. Select one:

a. OMR3.00

b. OMR11.00

c. None of the answers given

d. OMR0.10

e. OMR10.00

CLEAR MY CHOICE

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Answer #1

Option is E- OMR 10.

Fixed costs          750,000
Direct labor hours          250,000
fixed cost per hour fixed cost/ direct labor hour
fixed cost per hour                       3
Variable OH per hour                       7
Total OH rate per hour = Fixed cost per hour + variable cost per hour
3+7
                   10
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