John has applied overhead of $80,000 and actual overhead of $70,600 for the month of November. He applies overhead based on direct labor hours, and that amounts to 10,000 hours for the month of November. The overhead for the year was estimated to be $1,120,000. How many direct labor hours were estimated for the year?

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andromache andromache · Answer 1 · 2019-10-03T14:25:48+02:00

Answer:

The estimated direct labor hour is 140,000

Explanation:

For computing the direct labor hours, first, we have to compute the predetermined overhead rate. The formula is shown below:

Predetermined overhead rate = (Applied overhead) ÷ (estimated direct labor-hours)

= $80,000 ÷ 10,000 hours

= $8

Now the direct labor hours equal to

= Estimated overhead ÷ predetermined overhead rate

= $1,120,000 ÷ $8

= 140,000