Aspen Technologies has the following budget data: If factory overhead is to be applied based on direct labor hours, the predetermined overhead rate is

Question

Aspen Technologies has the following budget data:  If factory overhead is to be applied based on direct labor hours, the predetermined overhead rate is

Quizplus · Accepted Answer

To calculate the predetermined overhead rate using direct labor hours method, we need to divide the estimated total factory overhead costs by the estimated total direct labor hours.

Predetermined overhead rate = Estimated total factory overhead costs / Estimated total direct labor hours

Using the data from the budget, we have: 
Estimated total factory overhead costs = $528,000 
Estimated total direct labor hours = 40,000

Predetermined overhead rate = $528,000 / 40,000 = $13.20

Therefore, the answer is B.

Aspen Technologies Has the Following Budget Data: If Factory