The predetermined overhead rate for manufacturing overhead for 2008 is $4.00 per direct labor hour. Employees are expected to earn $5.00 per hour and the company is planning on paying its employees $100,000 during the year. However, only 75% of the employees are classified as “direct labor.” What was the estimated manufacturing overhead for 2008?
$400000
To calculate the estimated manufacturing overhead for 2008, we need to follow these steps:
Step 1: Determine the total number of direct labor hours.
To find the total number of direct labor hours, we need to calculate the number of hours worked by all employees. Since only 75% of the employees are classified as direct labor, we need to multiply the total number of employees by this percentage.
Let's assume the total number of employees is X.
So, the number of direct labor employees = X * 75%
Step 2: Calculate the total number of direct labor hours.
Since the employees are expected to earn $5.00 per hour, the total number of direct labor hours is obtained by dividing the total labor cost by the labor rate per hour.
Total labor cost = $100,000
Labor rate per hour = $5.00
Total number of direct labor hours = Total labor cost / Labor rate per hour
Step 3: Calculate the estimated manufacturing overhead.
The manufacturing overhead rate is given as $4.00 per direct labor hour.
Estimated manufacturing overhead = Total number of direct labor hours * Manufacturing overhead rate
By following these steps, we can calculate the estimated manufacturing overhead for 2008.