Question

If annual overhead costs are expected to be $730000 and direct labor costs are expected to be $1000000, then if the activity base is direct labor costs:

a predetermined overhead rate cannot be determined.

for every dollar of direct labor, 73.0 cents of manufacturing overhead will be assigned.

$73.0 is the predetermined overhead rate.

for every dollar of manufacturing overhead, 1.4 cents of direct labor will be assigned.

Answer 1

Predetermined Overhead rate = Estimated overhead/Estimated total labor cost = 730,000/1,000,000 = 73% It implies, for every $1 of direct labor, $0.73 of manufacturing overhead will be incurred.
Option B is the answer