Clark Technology, Inc., employs a job-order costing system. The company uses pre
ID: 2455627 • Letter: C
Question
Clark Technology, Inc., employs a job-order costing system. The company uses predetermined overhead rates in applying
manufacturing overhead cost to individual jobs. The predetermined overhead rate is based on labor hours. At the
beginning of the year, the company's management made the following estimates for the year:
Machine-hours................ 321,000
Direct labor-hours.......... 69,000
Direct materials cost........ $ 575,000
Direct labor cost............ $ 438,000
Manufacturing overhead cost $1,035,000
Compute the predetermined overhead rate that should be used during the year.
Estimated $MOH ÷ Estimated activity
Clark Technology, Inc., employs a job-order costing system. The company uses predetermined overhead rates in applying
manufacturing overhead cost to individual jobs. The predetermined overhead rate is based on labor hours. At the
beginning of the year, the company's management made the following estimates for the year:
Machine-hours................ 321,000
Direct labor-hours.......... 69,000
Direct materials cost........ $ 575,000
Direct labor cost............ $ 438,000
Manufacturing overhead cost $1,035,000
Compute the predetermined overhead rate that should be used during the year.
Response Feedback:Estimated $MOH ÷ Estimated activity
Explanation / Answer
(Amount in $)
Predetermined overhead rate : Manufacturing overhead cost/Direct labor hours
10,35,000/69000
$ 15 per labor hours