The following budget data are available for Sharp Company: $$\begin{array} { l r }
\text { Estimated direct labor hours } & 12,000 \
\text { Estimated direct labor doll ars } & \$ 90,000 \
\text { Estimated factory overhead costs } & \$ 179,000 \
\text { Actual direct lab or hours } & 11,500 \
\text { Actual direct labor dollars } & \$ 92,000 \
\text { Actual factory overhead costs } & \$ 180,000
\end{array}$$ If factory overhead is to be applied based on direct labor dollars, the predetermined overhead rate is

Question

The following budget data are available for Sharp Company: $$\begin{array} { l r } 
\text { Estimated direct labor hours } & 12,000 \
\text { Estimated direct labor doll ars } & \$ 90,000 \
\text { Estimated factory overhead costs } & \$ 179,000 \
\text { Actual direct lab or hours } & 11,500 \
\text { Actual direct labor dollars } & \$ 92,000 \
\text { Actual factory overhead costs } & \$ 180,000
\end{array}$$ If factory overhead is to be applied based on direct labor dollars, the predetermined overhead rate is

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by dividing estimated factory overhead costs by estimated direct labor dollars: $179,000 / $90,000 = 1.99 or 199%.

The Following Budget Data Are Available for Sharp Company If Factory Overhead Is to Be Applied Based on Direct