Question

Moonrise Bakery applies factory overhead based on direct labor costs. The company incurred the following costs during 2017: direct materials costs, $660,000; direct labor costs, $3,100,000; and factory overhead costs applied, $2,170,000.
1. Determine the company's predetermined overhead rate for year 2017.

Answer 1

Answer:

$0.70

Explanation:

Given that,

Direct materials costs = $660,000

Direct labor costs = $3,100,000

Factory overhead costs applied = $2,170,000

company's predetermined overhead rate for year 2017:

= Factory overhead costs applied  ÷ Direct labor costs

= $2,170,000 ÷ $3,100,000

= $0.70

Therefore, the company's predetermined overhead rate is 0.70