Kelsh Company Uses a Predetermined Overhead Rate Based on Machine

question 94

Multiple Choice

Kelsh Company uses a predetermined overhead rate based on machine hours to apply manufacturing overhead to jobs.The company has provided the following estimated costs for next year:
$\begin{array}{|l|r|}\hline \text { Direct materials } & \$ 10,000 \\\hline \text { Direct labour } & 30,000 \\\hline \text { Sales commissions } & 40,000 \\\hline \text { Salary of production supervisor } & 20,000 \\\hline \text { Indirect materials } & 4,000 \\\hline \text { Advertising expenses } & 8,000 \\\hline \text { Rent on factory equipment } & 10,000 \\\hline\end{array}$
Kelsh estimates that 5,000 direct labour hours and 10,000 machine hours will be worked during the year.What will be the predetermined overhead rate per hour?

• A) $6.80.
• B) $6.40.
• C) $3.40.
• D) $8.20.

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Definitions:

Bona Fide Occupational Qualification

A legitimate requirement for a particular job that allows for discrimination that is otherwise illegal when it is reasonably necessary to the normal operation of that particular business or enterprise.

Pregnancy-Based Discrimination

Unfair treatment or discrimination in the workplace based on pregnancy, childbirth, or related medical conditions, which is illegal under various laws.

Family and Medical Leave Act

A United States federal legislation that allows workers to take unpaid leave with job security for specific family and medical purposes.

Leave Availability

The provision and policies regarding time off from work that employees are entitled to for various reasons.