(Appendix 10A) Fredin Incorporated makes a single product--an electrical motor used in many long-haul trucks. 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 predetermined overhead rate is closest to:
A) $22.76 per labor-hour
B) $11.38 per labor-hour
C) $17.74 per labor-hour
D) $8.87 per labor-hour

Question

(Appendix 10A) Fredin Incorporated makes a single product--an electrical motor used in many long-haul trucks. 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 predetermined overhead rate is closest to:
A) $22.76 per labor-hour 
B) $11.38 per labor-hour 
C) $17.74 per labor-hour 
D) $8.87 per labor-hour

Quizplus · Accepted Answer

Predetermined overhead rate = $266,100/30,000 labor-hours = $8.87 per labor-hour

(Appendix 10A) Fredin Incorporated Makes a Single Product--An Electrical Motor