A company expected its annual overhead costs to be $1,800,000 and direct labor costs to be $1,000,000.Actual overhead was $1,740,000, and actual labor costs totaled $1,100,000.How much is the company's predetermined overhead rate to the nearest cent?
A)$1.74
B)$1.57
C)$1.80
D)$1.64

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by dividing the estimated overhead costs by the estimated direct labor costs: $1,800,000 / $1,000,000 = $1.80.

A Company Expected Its Annual Overhead Costs to Be $1,800,000