(Appendix 10A) A manufacturer of industrial equipment has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:

-What is the predetermined overhead rate to the nearest cent?
A) $19.30 per DLH
B) $19.65 per DLH
C) $19.80 per DLH
D) $20.15 per DLH

Question

(Appendix 10A) A manufacturer of industrial equipment has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
  The following data pertain to operations for the most recent period:
 
-What is the predetermined overhead rate to the nearest cent?
A) $19.30 per DLH 
B) $19.65 per DLH 
C) $19.80 per DLH 
D) $20.15 per DLH

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead ÷ Denominator level of activity
= ($56,400 + $100,800) ÷ 8,000 DLHs
= $157,200 ÷ 8,000 DLHs
= $19.65 per DLH

(Appendix 10A) a Manufacturer of Industrial Equipment Has a Standard