In: Accounting
The predetermined overhead rate for manufacturing overhead for 2016 is $5.00 per direct labor hour. Employees are expected to earn $8.00 per hour and the company is planning on paying its employees $290,000 during the year. However, only 80% of the employees are classified as "direct labor." What was the estimated manufacturing overhead for 2016?
Estimated manufacturing overhead = $ 145,000 calculated as below
A | Amount to be paid to employees [direct + indirect] | $ 290,000.00 |
B | Rate per hour | $ 8.00 |
C = A/B | Total no. of labor hours | 36,250 |
D | % of direct labor hour | 80% |
E = C x D | No. of direct labor hour | 29,000 |
F | Predetermined Overhead rate | $ 5.00 |
G = E x F | Estimated Manufacturing Overhead for 2016 = Answer | $ 145,000.00 |