Reference no: EM131775031

Calculate a company's predetermined overhead rate on the basis of direct labor hours?

The Orville Smith Company, a small manufacturer, uses a job-costing system to measure and track product costs for its line of specialty outdoor clothing and uses normal costing to allocate overhead costs to its products. For the coming year, Kristin George, the company's controller, estimates total overhead costs to be $100,000. Production manager Portia Kabler told Kristin that her best estimate for total production time for the year is 20,000 hours. Production data for the first quarter of the year is as follows:

                                                         Parkas             Shirts            Pants           Shoes

Direct materials used                         16,000            12000            9500            11500

Direct Labor Cost                                13,000           10,000           7,000           9,500

Direct Labor Hours                             1500                  1250             850               950