A furniture manufacturer 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) $15.94
B) $16.40
C) $14.61
D) $15.03

Question

A furniture manufacturer 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) $15.94 
B) $16.40 
C) $14.61 
D) $15.03

Quizplus · Accepted Answer

The predetermined overhead rate is calculated as follows:
Predetermined overhead rate = Budgeted manufacturing overhead cost / Budgeted labor-hours
= $656,000 / 40,000 DLHs
= $16.40 per DLH (rounded to the nearest cent)

A Furniture Manufacturer Has a Standard Costing System Based on Standard