The predetermined overhead rate for manufacturing overhead for 2016 is $5.00 per direct labor hour. Employees...

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?

Expert Solution

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

ekkarill92 answered 7 months ago

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