Problem:
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 $77,250 and 2,500 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $79,000 and actual direct labor-hours were 2,400.
The predetermined overhead rate for the year was closest to:
- $29.66
- $32.92
- $31.60
- $30.90
Note: Be sure to show how you arrived at your answer.