Federer Company Is Debating the Use of Direct Labor Cost

question 225

Multiple Choice

Federer Company is debating the use of direct labor cost or direct labor hours as the cost allocation base for allocating manufacturing overhead. The following information is available for the most recent year: If Federer Company uses direct labor cost as the allocation base, what would the predetermined manufacturing overhead rate be?

• A)70%
• B)75%
• C)91%
• D)85%

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