Purves Corporation is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $121,000 and 10,000 direct labor-hours for the period. The company incurred actual total fixed manufacturing overhead of $113,000 and 10,900 total direct labor-hours during the period. The predetermined overhead rate is closest to:
A) $10.37
B) $12.10
C) $11.10
D) $11.30

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by dividing the estimated total fixed manufacturing overhead ($121,000) by the estimated total direct labor-hours (10,000). This gives $121,000 / 10,000 = $12.10 per direct labor-hour.

Purves Corporation Is Using a Predetermined Overhead Rate That Was