Maria's Custom Tailoring is very labour intensive.Therefore,Maria has decided to use direct labour hours as the cost driver for assigning service overhead costs to specific jobs.During the month of February,the company incurred overhead costs of $6000.Some 600 direct labour hours were expected to be used during the month.Total actual direct labour hours during the month totalled 800.What is the predetermined overhead rate per month,if based on direct labour hours?
A) $ 10.00
B) $ 7.50
C) $ 0.75
D) $ 0.101

Question

Quizplus · Accepted Answer

The predetermined overhead rate per direct labour hour is calculated by dividing the total expected overhead costs by the total expected direct labour hours. Therefore, $6000 / 600 hours = $10.00 per direct labour hour.

Maria's Custom Tailoring Is Very Labour Intensive