Meger Manufacturing uses the direct labor cost method for applying factory overhead to production.The budgeted direct labor cost and factory overhead for the previous fiscal year were $1,000,000 and $700,000,respectively.Actual direct labor cost and factory overhead were $1,100,000 and $825,000,respectively.
What was Meger's predetermined factory overhead rate?
A)70.0%
B)82.5%
C)63.6%
D)133.0%

Question

Meger Manufacturing uses the direct labor cost method for applying factory overhead to production.The budgeted direct labor cost and factory overhead for the previous fiscal year were $1,000,000 and $700,000,respectively.Actual direct labor cost and factory overhead were $1,100,000 and $825,000,respectively. ​
What was Meger's predetermined factory overhead rate?
A)70.0%
B)82.5%
C)63.6%
D)133.0%

Quizplus · Accepted Answer

The predetermined factory overhead rate is calculated by dividing the budgeted factory overhead by the budgeted direct labor cost: $700,000 / $1,000,000 = 70.0%.

Meger Manufacturing Uses the Direct Labor Cost Method for Applying