Q-Dot Manufacturing Uses a Predetermined Overhead Allocation Rate Based on Direct

question 14

Multiple Choice

Q-dot Manufacturing uses a predetermined overhead allocation rate based on direct labor hours.It has provided the following information for the year: $$\begin{array} { | l | r | } \hline \text { Manufacturing overhead costs allocated to production } & \$ 185,000 \\\hline \text { Actual direct materials cost } & \$ 540,000 \\\hline \text { Actual direct labor cost } & \$ 2,470,000 \\\hline \text { Actual direct labor hours } & 9,020 \text { direct labor hours } \\\hline \text { Estimated machine hours } & 180,000 \text { machine hours } \\\hline\end{array}$$
Based on the above information,calculate Q-dot's predetermined overhead allocation rate.(Round your answer to two decimal places.)

• A) $1.03 per machine hour
• B) 7.49% of direct labor cost
• C) 34.26% of direct materials cost
• D) $20.51 per direct labor hour

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Definitions:

Valuation Allowance

A contra-account used to reduce the carrying value of deferred tax assets if it is more likely than not that some portion will not be realized.

U.S. GAAP

Generally Accepted Accounting Principles as practiced in the United States, a framework of accounting standards, principles, and procedures.

Reversing Temporary Difference

A temporary difference that will result in deductible amounts in future years, affecting taxable income.

Originating Temporary Difference

An originating temporary difference in accounting refers to the initial differences between the book value of an asset or liability and its tax base, which will result in taxable or deductible amounts in the future.