Darrow Corporation Uses a Predetermined Overhead Rate Based on Direct

question 280

Multiple Choice

Darrow Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 10,000 direct labor-hours and incurred $80,000 of actual manufacturing overhead cost. If overhead was underapplied by $2,000, the predetermined overhead rate for the Corporation for the year must have been:

• A) $7.80 per direct labor-hour
• B) $8.00 per direct labor-hour
• C) $8.20 per direct labor-hour
• D) $8.40 per direct labor-hour

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