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 variable component of the predetermined overhead rate is closest to:
A) $1.76 per labor-hour
B) $2.36 per labor-hour
C) $2.20 per labor-hour
D) $1.94 per labor-hour

Question

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 variable component of the predetermined overhead rate is closest to:
A) $1.76 per labor-hour 
B) $2.36 per labor-hour 
C) $2.20 per labor-hour 
D) $1.94 per labor-hour

Quizplus · Accepted Answer

Variable component of the predetermined overhead rate = $82,450/42,500 labor-hours
= $1.94 per labor-hour

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