(Appendix 10A) Chojnowski 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) $13.04 per labor-hour
B) $7.67 per labor-hour
C) $15.65 per labor-hour
D) $9.21 per labor-hour

Question

(Appendix 10A) Chojnowski 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) $13.04 per labor-hour 
B) $7.67 per labor-hour 
C) $15.65 per labor-hour 
D) $9.21 per labor-hour

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = $325,975/42,500 labor-hours
= $7.67 per labor-hour

(Appendix 10A) Chojnowski Incorporated Makes a Single Product--A Cooling Coil