Techniques, Inc. uses a predetermined manufacturing overhead rate based on direct labor hours to apply its indirect product costs to jobs. The following information has been collected for the previous year: Techniques used 20,000 direct labor hours and 40,000 machine hours during the previous year. What is the predetermined overhead rate per direct labor hour? $8.53 per hour. $7.50 per hour. $14.50 per hour. $7.78 per hour. Direct materials$ 66,500 Direct labor 89,000 Sales commission 44,500 Indirect labor 30,000 Rent on office equipment 15,000 Depreciation factory building 45,000 Utilities factory 75,000 Solution Predetermined overhead rate: = ($30,000+$45,000+$75,000)÷20,000 = $7.5 per hour.

1. Techniques, Inc. uses a predetermined manufacturing overhead rate based on direct labor hours
to apply its indirect product costs to jobs. The following information has been collected for the
previous year:
Techniques used 20,000 direct labor hours and 40,000 machine hours during the previous year.
What is the predetermined overhead rate per direct labor hour?
$8.53 per hour.
$7.50 per hour.
$14.50 per hour.
$7.78 per hour. Direct materials$ 66,500 Direct labor 89,000 Sales commission
44,500 Indirect labor 30,000 Rent on office equipment 15,000 Depreciation factory
building 45,000 Utilities factory 75,000
Solution
Predetermined overhead rate:
= ($30,000+$45,000+$75,000)÷20,000
= $7.5 per hour