The predetermined manufacturing overhead rate for 2020 was $4.00 per direct labor hour; employees were paid $5.00 per hour. If the estimated direct labor cost was $75,000, what was the estimated manufacturing overhead?
A) $15,000.
B) $60,000.
C) $75,000.
D) $93,750.

Question

Quizplus · Accepted Answer

The estimated direct labor hours can be calculated by dividing the estimated direct labor cost by the hourly wage ($75,000 / $5.00 = 15,000 hours). The estimated manufacturing overhead is then calculated by multiplying the predetermined overhead rate by the estimated direct labor hours (15,000 hours * $4.00 = $60,000).

The Predetermined Manufacturing Overhead Rate for 2020 Was $4