Archangel Manufacturing Calculated a Predetermined Overhead Allocation Rate at the Beginning

question 114

Multiple Choice

Archangel Manufacturing calculated a predetermined overhead allocation rate at the beginning of the year based on direct labor costs.The production details for the year are given below: $\begin{array} { | l | l | } \hline \text { Total manufacturing overhead costs estimated at the beginning of the year } & \$ 150,000 \\\hline \text { Total direct labor costs estimated at the beginning of the year } & \$ 340,000 \\\hline \text { Total direct labor hours estimated at the beginning of the year } & 10,000 \text { direct labor hours } \\\hline \text { Actual manufacturing overhead costs for the year } & \$ 150,000 \\\hline \text { Actual direct labor costs for the year } & \$ 360,000 \\\hline \text { Actual direct labor hours for the year } & 11,000 \text { direct labor hours }\\\hline\end{array}$ Calculate the manufacturing overhead allocation rate for the year based on the above data.(Round your final answer to two decimal places.)

• A) 44.12%
• B) 240.00%
• C) 11.33%
• D) 27.27%

---

Definitions:

Income

Cash inflow, regularly obtained, as compensation for work or earnings from invested capital.

Average Tax Rate

The average tax rate is the proportion of total taxable income paid in taxes, calculated by dividing the total tax paid by the total income.

Marginal Tax Rate

The rate at which the last dollar of income is taxed.

Lump-Sum Tax Rate

A tax that is a fixed amount, no matter the change in circumstance of the taxed entity. This creates a situation where the tax burden falls more heavily on those with lower income or profit.