LaFlame Corporation uses a job order costing system with a single plantwide predetermined overhead rate based on direct labor hours. The company’s predetermined overhead rate for the current year was based on the following data:
Total fixed manufacturing overhead | $ 540,000 |
Variable manufacturing overhead per direct labor hour | $ 2.80 |
Total direct labor hours | 90,000 |
LaFlame’s predetermined overhead rate for the upcoming year is:
a. |
$8.80 per direct labor hour. |
|
b. |
$2.80 per direct labor hour. |
|
c. |
$6.00 per direct labor hour. |
|
d. |
$540,000 regardless of direct labor hours. |
Predetermined rate for fixed overhead = Total estimated overhead/number of hours | |||||||
=$540000/90000 hours | |||||||
=$6 per hour | |||||||
Total predetermid overhead rate = $2.8 +6 | |||||||
=$8.8 | |||||||
Correct Option : a. $8.80 per direct labor hour. |
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LaFlame Corporation uses a job order costing system with a single plantwide predetermined overhead rate based...
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