A manufacturer of industrial equipment has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period:
-What is the predetermined overhead rate to the nearest cent?
A)$16.97
B)$17.25
C)$16.59
D)$17.65

Question

A manufacturer of industrial equipment has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:  The following data pertain to operations for the most recent period:  
-What is the predetermined overhead rate to the nearest cent?
A)$16.97 
B)$17.25 
C)$16.59 
D)$17.65

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead F1F1F1S1F1F1F10 Denominator level of activity
= ($8,500 + $34,625)F1F1F1S1F1F1F10 2,500 DLHs
= $43,125 F1F1F1S1F1F1F10 2,500 DLHs
= $17.25 per DLH

A Manufacturer of Industrial Equipment Has a Standard Costing System