Asked by aasiyyah ceasor on Jun 02, 2024
Verified
Purves Corporation is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $121,000 and 10,000 direct labor-hours for the period. The company incurred actual total fixed manufacturing overhead of $113,000 and 10,900 total direct labor-hours during the period. The predetermined overhead rate is closest to:
A) $10.37
B) $12.10
C) $11.10
D) $11.30
Predetermined Overhead Rate
An estimated rate used to assign overhead costs to products or job orders, based on a selected activity base.
Direct Labor-Hours
The total number of labor hours spent on producing a single unit of a product or service.
Fixed Manufacturing Overhead
Costs that do not vary with production volume, such as rent, salaries of permanent staff, and depreciation of factory equipment.
- Evaluate the decided overhead rate with the help of various parameters including machine-hours, labor-hours, and direct labor cost.
- Analyze the effects of actual overhead and labor hours differing from estimated amounts on the application of manufacturing overhead.
Verified Answer
Learning Objectives
- Evaluate the decided overhead rate with the help of various parameters including machine-hours, labor-hours, and direct labor cost.
- Analyze the effects of actual overhead and labor hours differing from estimated amounts on the application of manufacturing overhead.
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