Davie,IncUsed Estimated Direct Labor Hours of 250,000 and Estimated Manufacturing

question 90

Multiple Choice

Davie,Inc.used estimated direct labor hours of 250,000 and estimated manufacturing overhead costs of $1,150,000 in establishing its predetermined overhead allocation rate for the year.Actual results showed the following: $$\begin{array} { | l | l | } \hline \text { Actual manufacturing overhead } & \$ 800,000 \\\hline \text { Allocated manufacturing overhead } & \$ 850,000 \\\hline\end{array}$$ What was the number of direct labor hours worked during the year? (Round any intermediate calculations to two decimal places,and your final answer to the nearest whole number. )

• A)173,913 hours
• B)265,625 hours
• C)250,000 hours
• D)184,783 hours

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Definitions:

Retention Ratio

The proportion of earnings kept back in a company to reinvest, rather than being paid out as dividends.

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings, and dividends without having to increase debt or equity financing.

Inventory Turnover

A ratio showing how many times a company has sold and replaced inventory over a given period.

Inventory Balance

The total value of all the goods and materials held by a company as stock, intended for sale or production.