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The following budget data are available for Sharp Company: Estimated direct labor hours 12,000 Estimated direct labor dollars $90,000 Estimated factory overhead costs $179,000 Actual direct labor hours 11,500 Actual direct labor dollars $92,000 Actual factory overhead costs $180,000.

If factory overhead is to be applied based on direct labor dollars, the predetermined overhead rate is

a.199%
b.$15.65
c.$14.92
d.196%

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facundobuzzetti

Answer:

The correct anser is A. $1.99 per direct labor dollar.

Explanation:

Giving the following information:

Estimated direct labor dollars $90,000

Estimated factory overhead costs $179,000

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 179,000/90,000= $1.99 per direct labor dollar.

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