If Annual Overhead Costs Are Expected to Be $750000 and Direct

question 94

Multiple Choice

If annual overhead costs are expected to be $750000 and direct labor costs are expected to be $1000000 then if the activity base is direct labor costs:

• A) $1.33 is the predetermined overhead rate.
• B) for every dollar of manufacturing overhead 75 cents of direct labor will be assigned.
• C) for every dollar of direct labor 75 cents of manufacturing overhead will be assigned.
• D) a predetermined overhead rate cannot be determined.

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Definitions:

Resources

Assets, materials, and human capabilities used to produce goods and services in an economy.

Final Goods

Refers to products that have completed the manufacturing process and are purchased by consumers without further processing.

Margin

The difference between the cost of a product or service and its selling price.

Economics

The efficient allocation of the scarce means of production toward the satisfaction of human wants.