ABC Corporation Allocates Overhead Based on Direct Labor Cost

question 126

Multiple Choice

ABC Corporation allocates overhead based on direct labor cost.Assume ABC expects to incur a total of $1,025,000 in overhead costs and $820,000 in direct labor costs.Actual overhead costs incurred totaled $1,050,000 and actual direct labor costs totaled $800,100.ABC's predetermined overhead rate is closest to

• A)125% of direct labor cost.
• B)128% of direct labor cost.
• C)98% of direct labor costs.
• D)100% of direct labor costs.

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