Figure 5-7
The following information is available pertaining to the Production Division of Clarkson Enterprises:

-Refer to Figure 5-7. What is the plantwide overhead rate based on direct labor hours?
A) $1.00
B) $1.50
C) $3.00
D) $9.00

Question

Figure 5-7
The following information is available pertaining to the Production Division of Clarkson Enterprises:
 
-Refer to Figure 5-7. What is the plantwide overhead rate based on direct labor hours?
A) $1.00 
B) $1.50 
C) $3.00 
D) $9.00

Quizplus · Accepted Answer

The plantwide overhead rate is calculated by dividing the total estimated overhead cost by the total estimated direct labor hours.

Total estimated overhead cost = $300,000 + $400,000 = $700,000
Total estimated direct labor hours = 100,000 + 200,000 = 300,000

Plantwide overhead rate = Total estimated overhead cost / Total estimated direct labor hours = $700,000 / 300,000 = $2.33 per direct labor hour

Rounding up to the nearest whole number, the plantwide overhead rate based on direct labor hours is $3.00. Therefore, the correct answer is C.

Figure 5-7 The Following Information Is Available Pertaining to the Production Division