Equinox Fabrication Plant suffered a fire incident in August due to which most of the records for the year were destroyed.The following accounting data for the year that were recovered: The company bases its manufacturing overhead allocation on direct labor hours.What was the predetermined overhead allocation rate for the year?

Question

Equinox Fabrication Plant suffered a fire incident in August due to which most of the records for the year were destroyed.The following accounting data for the year that were recovered:  The company bases its manufacturing overhead allocation on direct labor hours.What was the predetermined overhead allocation rate for the year?

Quizplus · Accepted Answer

To calculate the predetermined overhead allocation rate, we need to divide the total manufacturing overhead cost by the total direct labor hours. From the given accounting data, we can see that the total manufacturing overhead cost for the year was $1,176,000 and the total direct labor hours were 40,000. 
Therefore, predetermined overhead allocation rate = Total manufacturing overhead cost / Total direct labor hours = $1,176,000 / 40,000 = $29.40 per direct labor hour. 
Hence, the correct answer is option C.

Equinox Fabrication Plant Suffered a Fire Incident in August Due