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Daffe Corporation Uses Direct Labor-Hours in Setting Its Predetermined Overhead

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Essay

Daffe Corporation uses direct labor-hours in setting its predetermined overhead rate.At the beginning of the year,the total estimated manufacturing overhead was $165,600.At the end of the year,actual direct labor-hours for the year were 11,900 hours,manufacturing overhead for the year was overapplied by $10,760,and the actual manufacturing overhead was $160,600.
Required:
What must have been the predetermined overhead rate for the year?


Definitions:

Flexible Budget

An adjustable budget that is sensitive to changes in levels of activity or the amount of volume.

Service Company

A service company is a business that earns revenue by providing intangible products or services, as opposed to selling physical goods.

Cost Formula

An equation used to predict costs at different levels of activity, incorporating fixed and variable cost components.

Wages and Salaries

The compensation paid to employees for their labor, including hourly wages and annual salaries.

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