Bhavik's Accounting Services Uses Job Costing and Applies Overhead Using

question 65

Multiple Choice

$\begin{array}{lccc}&\text { Professional} & \text { Other Direct } & \text {Professional }\\&\text { Labour Cost } & \text { Costs } & \text { Labour Hours }\\\text { Client } 57 & \$ 2,000 & \$ 800 & 20 \\\text { Client } 58 & 1,000 & 200 & 10 \\\text { Client 59 } & 5,000 & 600 & 50\end{array}$ Bhavik's Accounting Services uses job costing and applies overhead using a normal costing system using professional labour hours as the allocation base. This period's estimated overhead cost is $400,000, estimated professional labour cost is $800,000 and estimated direct labour hours are 8,000. This period actual overhead cost was $426,400, actual direct labour cost was $820,000, and actual direct labour hours were 8,200.
What is the overhead allocation rate?

• A) $60/hour
• B) $55/hour
• C) $52/hour
• D) $50/hour

---

Definitions:

Production

The process of creating goods and services through the combination of labor, materials, and technology.

Manufacturing Overhead

All indirect costs associated with the production process, excluding direct materials and direct labor costs.

Budgeted Fixed

Refers to the portion of a budget that represents fixed costs, which do not change with the level of activity within a certain range.

Manufacturing Overhead Applied

The portion of production overhead costs assigned to each unit of product based on a predetermined overhead rate, including indirect costs like utilities and rent.