Chapter 26, Problem 5SEA

PREDETERMINED FACTORY OVERHEAD RATE Millerlile Enterprises calculates a predetermined factory overhead rate so that factory overhead may be applied to production during the month. It calculates the overhead using three different methods and then decides which one to use. Total estimated factory overhead costs are $540,000. Total estimated direct labor hours are 50,000. Total estimated direct labor costs are $900,000. Total machine hours are estimated to be 80,000.

Calculate the predetermined overhead application rates based on (1) direct labor hours, (2) direct labor costs, and (3) machine hours.