Sandy Retailers Uses Operational Costing In Addition,they Allocate Overhead Based on Direct Labour Hours

Sandy Retailers uses operational costing.A customer has requested 2000 units of a product.Sandy Retailers estimates the following will be incurred to fulfil the customer order:
$\begin{array}{ll} \text { Total direct labour hours } &\text { 75 hours }\\ \text { Direct labour cost per hour } & \text { \( \$ 25 \) per hour } \\\end{array}$

In addition,they allocate overhead based on direct labour hours.At the beginning of this year,they estimated overhead costs would total $1 000 000 and direct labour hours would be 200 000.
Required:
A. What will be the predetermined cverhead rate used during the year?
B. What will be the tatal manufacturing casts for the above customer's arder?

Correct Answer:

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A. Predetermined averhead rate 00] 000 ...

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