Biology Forums - Study Force

Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year:

Direct materials	$ 6,000
Direct labor	$ 20,000
Rent on factory building	$ 15,000
Sales salaries	$ 25,000
Depreciation on factory equipment	$ 8,000
Indirect labor	$ 12,000
Production supervisor's salary	$ 15,000

Jameson estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be:

▸ $2.50 per direct labor-hour

▸ $2.79 per direct labor-hour

▸ $3.00 per direct labor-hour

▸ $4.00 per direct labor-hour

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