Use the budget data shown below for Sharp Company to answer the questions that follow:
$$\begin{array} { l r }
\text { Estimated direct labor hours } & 12,000 \
\text { Estimated direct labor dollars } & \$ 90,000 \
\text { Estimated factory overhead costs } & \$ 179,000 \
\text { Actual direct labor hours } & 11,500 \
\text { Actual direct labor dollars } & \$ 92,000 \
\text { Actual factory overhead costs } & \$ 180,000
\end{array}$$
-If factory overhead is to be applied based on direct labor dollars, the predetermined overhead rate is
A) 199%
B) 196%
C) $14.92
D) $15.65

Question

Use the budget data shown below for Sharp Company to answer the questions that follow:
 $$\begin{array} { l r } 
\text { Estimated direct labor hours } & 12,000 \
\text { Estimated direct labor dollars } & \$ 90,000 \
\text { Estimated factory overhead costs } & \$ 179,000 \
\text { Actual direct labor hours } & 11,500 \
\text { Actual direct labor dollars } & \$ 92,000 \
\text { Actual factory overhead costs } & \$ 180,000
\end{array}$$
-If factory overhead is to be applied based on direct labor dollars, the predetermined overhead rate is
A) 199%
B) 196%
C) $14.92
D) $15.65

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%.

Use the Budget Data Shown Below for Sharp Company to Answer