Kris Company calculates its predetermined rates using practical volume, which is 325,000 units.The standard cost system allows 3 direct labor hours per unit produced.Overhead is applied using direct labor hours.The total budgeted overhead is $4,260,000, of which $994,000 is fixed overhead.The actual results for the year are as follows:

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The predetermined fixed overhead rate is
A) $3.35 per direct labor hour.
B) $1.02 per direct labor hour.
C) $5.50 per direct labor hour.
D) $4.00 per direct labor hour.
E) None of these.

Question

Kris Company calculates its predetermined rates using practical volume, which is 325,000 units.The standard cost system allows 3 direct labor hours per unit produced.Overhead is applied using direct labor hours.The total budgeted overhead is $4,260,000, of which $994,000 is fixed overhead.The actual results for the year are as follows:

-
The predetermined fixed overhead rate is

- 
The predetermined fixed overhead rate is
A) $3.35 per direct labor hour. 
B) $1.02 per direct labor hour. 
C) $5.50 per direct labor hour. 
D) $4.00 per direct labor hour. 
E) None of these.

Quizplus · Accepted Answer

$994,000 / (3 × 325,000) = $1.02

Kris Company Calculates Its Predetermined Rates Using Practical Volume, Which