The predetermined overhead rate for manufacturing overhead for 2016 is $5.00 per direct labor hour. employees are expected to earn $8.00 per hour and the company is planning on paying its employees $290,000 during the year. however, only 80% of the employees are classified as "direct labor." what was the estimated manufacturing overhead for 2016?

Estimated Manufacturing Overhead for 2016 is  $145,000

Explanation:

given data

overhead rate = $5.00 per direct labor hour

expected to earn = $8.00 per hour

paying  employees = $290,000

direct labor = 80%

to find out

estimated manufacturing overhead

solution

we know here total number of labor hours will be =

total number of labor hours =

total number of labor hours = 36,250

so

Number of direct labor hour = 80% of 36,250

Number of direct labor hour =  29,000

so

Estimated Manufacturing Overhead for 2016 is = Number of direct labor hour × overhead rate

Estimated Manufacturing Overhead for 2016 is = 29,000  × 5

Estimated Manufacturing Overhead for 2016 is = $145,000

$145,000

Explanation:

Amount to be paid to employees [direct + indirect] = $290,000

Rate per hour = $8.00

                                                  = 36,250

% of direct labor hour = 80%

No. of direct labor hour = Total no. of labor hours × % of direct labor hour

                                       = 36,250 × 80%

                                       = 29,000

Predetermined Overhead rate = $5

Estimated Manufacturing Overhead for 2016:

= Predetermined Overhead rate × No. of direct labor hour

= $5 × 29,000

= $145,000

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