The Predetermined Overhead Application Rate Based on Direct Labor Hours

question 68

Multiple Choice

The predetermined overhead application rate based on direct labor hours is computed as:

• A)actual total overhead costs divided by actual direct labor hours.
• B)estimated total overhead costs divided by estimated direct labor hours.
• C)actual total overhead costs divided by estimated direct labor hours.
• D)estimated total overhead costs divided by actual direct labor hours.

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Definitions:

Intangibility

A characteristic of services that implies they cannot be seen, touched, or made tangible in the same manner as physical products.

Inseparability

A characteristic of services indicating that they are often produced and consumed simultaneously and cannot be separated from their provider.

Nonprofit Organizations

Entities that operate for purposes other than making a profit, focusing on social, charitable, cultural, or educational objectives.

American Red Cross

A humanitarian organization that provides emergency assistance, disaster relief, and education inside the United States.