The Work in Process Inventory account of a manufacturing company has a $7,728 debit balance. The company applies overhead using direct labor cost. The cost sheet of the only job still in process shows direct material cost of $2,800 and direct labor cost of $1,600. Therefore, the company's predetermined overhead rate is:

Question

Business

Kayley Mason

10 August, 19:10

The Work in Process Inventory account of a manufacturing company has a $7,728 debit balance. The company applies overhead using direct labor cost. The cost sheet of the only job still in process shows direct material cost of $2,800 and direct labor cost of $1,600. Therefore, the company's predetermined overhead rate is:

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Answers (2)

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Sienna Case · Answer 1

The company's predetermined overhead rate is 208%

Explanation:

In order to calculate the company's predetermined overhead rate we would have to calculate first the Overhead applied as follows:

o verhead applied=Work in process balance-Direct Material-Direct Labor

o verhead applied=$7,728-$2,800-$1,600

o verhead applied=$3,328

Therefore, Overhead application rate = $3,328/$1,600 = 217%

Overhead application rate = 208%

The company's predetermined overhead rate is 208%

Nikolai Pugh · Answer 2

208%

Explanation:

Work In Progress = Direct materials + Direct labor + Over Head

$7,728 = $2,800 + $1,600 + OH

$7,728=$4,400

$7,728-$4,400

OH=$3,328

OH rate = $3,328/$1,600

= 208%