To find the predetermined overhead rate, we use the formula:

$\text{Predetermined overhead rate} = \frac{\text{Estimated total manufacturing overhead}}{\text{Estimated total labor-hours}}$

Where:

1. Estimated total manufacturing overhead is the sum of estimated fixed and variable overhead costs.
2. Estimated total labor-hours is the estimated number of labor-hours for the year.

Step 1: Calculate the estimated total variable manufacturing overhead

$\text{Estimated total variable overhead} = \text{Estimated labor-hours} \times \text{Variable overhead rate per hour}$ $\text{Estimated total variable overhead} = 33,500 \times 6.37 = 213,395$

Step 2: Calculate the estimated total manufacturing overhead

$\text{Estimated total manufacturing overhead} = \text{Estimated total fixed overhead} + \text{Estimated total variable overhead}$ $\text{Estimated total manufacturing overhead} = 850,900 + 213,395 = 1,064,295$

Step 3: Calculate the predetermined overhead rate

$\text{Predetermined overhead rate} = \frac{1,064,295}{33,500} \approx 31.77$

Thus, the predetermined overhead rate for the year was closest to $31.77 per labor-hour.

Would you like to go over this in more detail or have any other questions?

Here are 5 related questions to explore further:

1. How does a company typically decide on estimated labor hours?
2. What is the significance of a predetermined overhead rate in cost accounting?
3. How does actual labor-hour variation affect overhead application?
4. Can a company revise its predetermined overhead rate mid-year?
5. What are the potential impacts of under- or over-applied overhead?

Tip: Always review your estimates throughout the year to ensure your actual costs align with your predetermined overhead rates, minimizing discrepancies.