Nemes Incorporated makes a single product-a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below: The fixed component of the predetermined overhead rate is closest to:
A) $9.10 per labor-hour
B) $5.35 per labor-hour
C) $6.36 per labor-hour
D) $10.81 per labor-hour

Question

Nemes Incorporated makes a single product-a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below:  The fixed component of the predetermined overhead rate is closest to:
A) $9.10 per labor-hour 
B) $5.35 per labor-hour 
C) $6.36 per labor-hour 
D) $10.81 per labor-hour

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = $324,360/51,000 labor-hours
= $6.36 per labor-hour

Nemes Incorporated Makes a Single Product-A Cooling Coil Used in Commercial