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At the beginning of the year, Titanium Inc. estimated that overhead would be $100,000 and direct labor hours would be 20,000. At the end of the year, actual overhead was $175,900 and there were actually 35,000 direct labor hours. What is the predetermined overhead rate? a.$5 per direct labor hour b.$6 per direct labor hour c.$3 per direct labor hour d.$4 per direct labor hour e.None of these choices are correct.

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Answer:

a.$5 per direct labor hour

Explanation:

The computation of the predetermined overhead rate is shown below:

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

= $100,000 ÷ 20,000 direct labor hours

= $5 per direct labor hour

Simply we divide the total estimated manufacturing overhead by the estimated direct labor hours so that the correct rate can come

All other information which is given is not relevant. Hence, ignored it

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