Baka Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $240, 300 and 4, 690 estimated direct labor hours. Actual manufacturing overhead for the year amounted to $243,000 and actual direct labor-hours were 4, 640. The predetermined overhead rate for the year was closest to:
Total budgeted overhead cost for the year – $240,300
Total budgeted direct labour hours – 4,690 hours
Overhead rate per hour – 240300/4690 = $51.2367
The predetermined overhead rate for the year was closest to $51
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