Coleridge Company estimates that its production workers will work 125,000 direct labor hours during the upcoming period and that overhead costs will amount to $750,000.Assume Overhead to be allocated on the basis of direct labor hours.What predetermined overhead rate would be used to apply overhead to production during the period?
A) $6.00 per direct labor hour
B) $0.67 per direct labor hour
C) $0.67 per unit
D) $6.00 per unit

Question

Quizplus · Accepted Answer

Predetermined overhead rate = Expected overhead costs ÷ Expected amount of allocation base
Predetermined overhead rate = $750,000 ÷ 150,000 direct labor hours = $6.00 per direct labor hour

Coleridge Company Estimates That Its Production Workers Will Work 125,000