Topeka Company Topeka Company has two departments (Processing and Packaging) and uses a job-order costing system. Topeka applies overhead in Processing based on machine hours and on direct labor cost in Packaging. The following information is available for July:
Refer to Topeka Company What is the overhead application rate for Packaging?

Question

Topeka Company Topeka Company has two departments (Processing and Packaging) and uses a job-order costing system. Topeka applies overhead in Processing based on machine hours and on direct labor cost in Packaging. The following information is available for July:
 Refer to Topeka Company What is the overhead application rate for Packaging?

Quizplus · Accepted Answer

The overhead application rate for Packaging is calculated as follows:

Overhead application rate = Total estimated overhead cost for Packaging / Total estimated direct labor cost for Packaging

From the information given, the total estimated overhead cost for Packaging is $9,900, and the total estimated direct labor cost for Packaging is $4,400.

Overhead application rate for Packaging = $9,900 / $4,400 = $2.25 per dollar of direct labor cost.

Therefore, the correct answer is B.

Topeka Company Topeka Company Has Two Departments (Processing and Packaging)