The following information has been gathered for the GHI Manufacturing Company for its fiscal year ending December 31: What is the predetermined manufacturing overhead rate assuming direct labor cost is used as the activity base?
A)48.4%
B)47.2%
C)49.0%
D)47.8%

Question

Quizplus · Accepted Answer

The predetermined manufacturing overhead rate is calculated by dividing the estimated manufacturing overhead cost by the estimated activity base. In this case, the estimated manufacturing overhead cost is $1,200,000 and the estimated direct labor cost is $2,500,000. Therefore, the predetermined manufacturing overhead rate is $1,200,000 / $2,500,000 = 48%.

The Following Information Has Been Gathered for the GHI Manufacturing