Baka 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 $239,700 and 4,730 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $244,000 and actual direct labor-hours were 4,630.

The predetermined overhead rate for the year was closest to:

$50.68 per direct labor-hour

Explanation:

The manufacturing over head is the part of the total manufacturing cost called  indirect costs. It is usually measured as  a function of an element of the direct cost.

Given that the company applies manufacturing overhead on the basis of direct labor-hours and predetermined overhead rate on total estimated overhead of $239,700 and 4,730 estimated direct labor-hours.

The predetermined overhead rate for the year was closest to

= $239,700/4730

= $50.68 per direct labor-hour

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