At the beginning of a year, a company predicts total direct materials costs of $

Question

At the beginning of a year, a company predicts total direct materials costs of $930,000 and total overhead costs of $1,210,000. If the company uses direct materials costs as its activity base to allocate overhead, what is the predetermined overhead rate it should use during the year?

1 At the beginning of a year, a company predicts total direct materials costs of $930,000 and total overhead costs of $1,210,000. If the company uses direct materials costs as its activity base to allocate overhead, what is the predetermined overhead rate it should use during the year? Predetermined overhead rate Choose Numerator: Choose Denominator: Rate Rate

Explanation / Answer

Predetermined Overhead rate = Total overhead cost / Total direct material cost *100

= $ 1210000/$ 930000*100

= 130.1 %

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