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Per hour labor cost....................Estimated.....Actual $10.00.......$9.75 Factory overhead....................$67,500.......$69,000 Labor hours..........................15,000.......16,000 

          Per hour labor cost....................Estimated.....Actual
$10.00.......$9.75
Factory overhead....................$67,500.......$69,000
Labor hours..........................15,000.......16,000
Per hour labor cost....................Estimated.....Actual 10.00.......9.75 Factory overhead....................67,500.......69,000 Labor hours..........................15,000.......16,000

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Horngren’s Cost Accounting
Horngren’s Cost Accounting
Srikant M. Datar, Madhav V. Rajan 16th Edition
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Problem Factory overhead rate and application. Faye Company produces electric hairdryers. Because variable overhead expense is closely related to hours worked, the company uses the direct labor hours method of applying factory overhead. The following data pertain to a recent accounting period: Required: Determine the following: (1) The predetermined factory overhead rate. (2) The applied factory overhead. (3) The over- or underapplied factory overhead. Step-by-step solution Estimated $10.00 $67,500 15,000 Actual $9.75 $69,000 16,000 Per hour labor cost Factory overhead Labor hours.
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Transcript

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00:01 Over here predetermined free overhead rate is evaluated as estimated factory overhead cost which is of the value $4 ,20 ,000 divided by estimated direct labor hours which is 16 ,000 hours.
00:36 So equating it we get the value to be $26 .25 per direct labor hour...
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