Biology Forums - Study Force

Stone Cliff Company manufactures custom-order furniture. During 2020, actual manufacturing overhead totaled $720,000. Based on the 2020 results, and projected production for 2021, management prepared the 2021 budget and estimated that manufacturing overhead would total $800,000. The estimated number of direct labor hours for 2021 is 50,000, and the estimated amount of direct labor cost is $1,000,000. The company plans to use direct labor hours as the basis to allocate overhead to jobs. During May and June 2021, employees worked on the following four jobs:

Monthly data	Job X43	Job X87	Job Z22	Job A33
May	​	​	​	​
Direct materials	$86,000	$72,000	$44,000	$38,000
Direct labor cost	$101,000	$91,000	$78,000	$52,000
Direct labor hours	5,050	4,550	3,900	2,600
June	​	​	​	​
Direct materials	$24,000	$41,000	$35,000	$24,000
Direct labor cost	$28,000	$52,000	$62,000	$32,800
Direct labor hours	1,400	2,600	3,100	1,640

What is the predetermined overhead rate that Stone Cliff will use to allocate overhead during 2021?

▸ $16.00 per direct labor hour

▸ $7.20 per direct labor hour

▸ $14.40 per direct labor hour

▸ $8.00 per direct labor hour

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