Bronzit Company estimated the following at the beginning of the year:

Bronzit uses departmental overhead rates.In the assembly department, direct labor hours are used to apply overhead.Machine hours are used to apply overhead in the testing department.
Actual data for the month of May is as follows:

If Bronzit uses a plant wide overhead rate based on direct labor hours, instead of departmental rates, what is the predetermined overhead rate rounded to the nearest cent?
A) $5 per direct labor hour
B) $8.65 per direct labor hour
C) $4.19 per direct labor hour
D) $4.50 per direct labor hour
E) $0.33 per direct labor hour

Question

Bronzit Company estimated the following at the beginning of the year:  
  
Bronzit uses departmental overhead rates.In the assembly department, direct labor hours are used to apply overhead.Machine hours are used to apply overhead in the testing department.
Actual data for the month of May is as follows:
 
 If Bronzit uses a plant wide overhead rate based on direct labor hours, instead of departmental rates, what is the predetermined overhead rate rounded to the nearest cent?
A) $5 per direct labor hour 
B) $8.65 per direct labor hour 
C) $4.19 per direct labor hour 
D) $4.50 per direct labor hour 
E) $0.33 per direct labor hour

Quizplus · Accepted Answer

Predetermined Overhead Rate = Estimated Annual Overhead / Estimated Annual Activity Level = $800,000 / $191,000 = $4.19 per direct labor hour

Bronzit Company Estimated the Following at the Beginning of the Year