Welch Corporation uses a predetermined overhead application rate of $.30 per direct labor hour.During the year it incurred $345,000 dollars of actual overhead,but it planned to incur $360,000 of overhead.The company applied $363,000 of overhead during the year.How many direct labor hours did the company plan to incur?
A)1,150,000
B)1,190,000
C)1,200,000
D)1,210,000

Question

Quizplus · Accepted Answer

To find the planned direct labor hours, we can use the following formula:

Planned Overhead / Predetermined Overhead Rate = Planned Direct Labor Hours

Planned overhead = $360,000
Predetermined overhead rate = $0.30

Planned Direct Labor Hours = $360,000 ÷ $0.30 = 1,200,000

Therefore, the company planned to incur 1,200,000 direct labor hours.

Welch Corporation Uses a Predetermined Overhead Application Rate of