Barr Mfg. provided the following information from its accounting records for 2017:
$\begin{array}{lr}
\text { Expected production } & 60,000 \text { labor hours } \
\text { Actual production } & 56,000 \text { labor hours } \
\text { Budgeted overhead } & \$ 900,000 \
\text { Actual overhead } & \$ 870,000
\end{array}$
How much is the overhead application rate if Barr bases the rate on direct labor hours?

Question

Barr Mfg. provided the following information from its accounting records for 2017:
 $\begin{array}{lr}
\text { Expected production } & 60,000 \text { labor hours } \
\text { Actual production } & 56,000 \text { labor hours } \
\text { Budgeted overhead } & \$ 900,000 \
\text { Actual overhead } & \$ 870,000
\end{array}$
 How much is the overhead application rate if Barr bases the rate on direct labor hours?

Quizplus · Accepted Answer

The overhead application rate based on direct labor hours is calculated by dividing the budgeted overhead by the expected production in labor hours: $900,000 / 60,000 hours = $15.00 per hour.

Barr Mfg Provided the Following Information from Its Accounting Records for for 2017