Vaden Incorporated makes a single product-a critical part used in commercial airline seats. 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) $11.14 per labor-hour
B) $7.61 per labor-hour
C) $7.96 per labor-hour
D) $10.66 per labor-hour

Question

Vaden Incorporated makes a single product-a critical part used in commercial airline seats. 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) $11.14 per labor-hour 
B) $7.61 per labor-hour 
C) $7.96 per labor-hour 
D) $10.66 per labor-hour

Quizplus · Accepted Answer

Fixed component of the predetermined overhead rate = $390,040 / 49,000 labor-hours
= $7.96 per labor-hour

Vaden Incorporated Makes a Single Product-A Critical Part Used in Commercial