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The following information has been gathered for the GHI Manufacturing Company for its fiscal year ending December 31: Actual manufacturing overhead costs $ 212,500 Actual direct labor hours 54,900 Actual direct labor costs $ 445,000 Estimated manufacturing overhead costs $ 210,000 Estimated direct labor $ 434,000 Estimated direct labor hours 56,000 What is the predetermined manufacturing overhead rate per direct labor hour?

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Answer:

The predetermined manufacturing overhead rate per direct labor hour is $3.75 per direct labor hour

Explanation:

Actual manufacturing overhead costs = $ 212,500

Actual direct labor hours = 54,900 hours

Actual direct labor costs = $ 445,000

Estimated manufacturing overhead costs = $210,000

Estimated direct labor hours = 56,000  hours

Predetermined Overhead Rate = Estimated manufacturing overhead costs ÷ Estimated direct labor hours

Predetermined Overhead Rate = $210,000 ÷ 56,000

Predetermined Overhead Rate = $3.75 per direct labor hour