Charleston Company
Charleston Company has two departments (Processing and Packaging)and uses a job-order costing system.Charleston applies overhead in Processing based on machine hours and on direct labor cost in Packaging.The following information is available for July:
$\begin{array}{llc}
\text { Machine hours } & \frac{\text { Processing }}{2,500} & \frac{\text { Packagin }}{1,000} \
\text { Directlabor cost } & \$ 44,500 & \$ 23,000 \
\text { Applied overhead } & \$ 55,000 & \$ 51,750
\end{array}$

Refer to Charleston Company What is the overhead application rate for Packaging?

Question

Charleston Company
Charleston Company has two departments (Processing and Packaging)and uses a job-order costing system.Charleston applies overhead in Processing based on machine hours and on direct labor cost in Packaging.The following information is available for July:
$\begin{array}{llc}
\text { Machine hours } & \frac{\text { Processing }}{2,500} & \frac{\text { Packagin }}{1,000} \
\text { Directlabor cost } & \$ 44,500 & \$ 23,000 \
\text { Applied overhead } & \$ 55,000 & \$ 51,750
\end{array}$

Refer to Charleston Company What is the overhead application rate for Packaging?

Quizplus · Accepted Answer

To calculate the overhead application rate for Packaging, we need to divide the total applied overhead for Packaging by the total direct labor cost for Packaging:

Overhead application rate = Applied overhead / Direct labor cost

Overhead application rate for Packaging = $51,750 / $23,000 = 2.25

Therefore, the overhead application rate for Packaging is $2.25 per dollar of direct labor cost. The correct answer is B.

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

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