Asked by Jezelle Zapanta on Jun 27, 2024
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CWN Company uses a job order costing system and last period incurred $80,000 of actual overhead and $100,000 of direct labor.CWN estimates that its overhead next period will be $75,000.It also expects to incur $100,000 of direct labor cost.If CWN bases applied overhead on direct labor cost,its predetermined overhead rate for the next period should be:
A) 75%.
B) 80%.
C) 107%.
D) 125%.
E) 133%.
Predetermined Overhead Rate
A rate calculated before the accounting period begins, used to allocate manufacturing overhead costs to individual units of production.
Actual Overhead
The actual costs incurred for indirect materials, indirect labor, and other expenses that cannot be directly traced to products or services.
Direct Labor Cost
The total cost of all the labor directly involved in the production of goods or services, not including indirect expenses like administration.
- Learn how to calculate and apply overhead rates to jobs.
- Calculate predetermined overhead rates and understand their application.
Verified Answer
Learning Objectives
- Learn how to calculate and apply overhead rates to jobs.
- Calculate predetermined overhead rates and understand their application.
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