If expected factory overhead costs are $300 000 and expected direct labour hours are 25 000, what is the overhead application rate per direct labour hour?

Question

Quizplus · Accepted Answer

To calculate the overhead application rate, we divide the total expected factory overhead costs by the expected direct labour hours:

Overhead application rate per direct labour hour = Total expected factory overhead costs ÷ Expected direct labour hours 
Overhead application rate per direct labour hour = $300 000 ÷ 25 000 
Overhead application rate per direct labour hour = $12.00

Therefore, the overhead application rate per direct labour hour is $12.00, so the best choice is B.

If Expected Factory Overhead Costs Are $300 000 and Expected