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Bakker 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 $100,000 and 2,500 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $102,000 and actual direct labor-hours were 2,400. The predetermined overhead rate was:

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Answer:

$40

Explanation:

The formula and the computation of the predetermined overhead rate is shown below:

Predetermined overhead rate = Estimated overhead ÷ Estimated direct labor hours

= $100,000 ÷ 2,500 direct labor hours

= $40

By dividing the estimated overhead from the estimated direct labor hours we can get the predetermined overhead rate and the same is to be considered

It recognized only estimated values and activity drivers

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