Jewel Company Calculates Its Predetermined Rates Using Practical Volume, Which

question 147

Multiple Choice

Jewel Company calculates its predetermined rates using practical volume, which is 300,000 units. The standard cost system allows two direct labour hours per unit produced. Overhead is applied using direct labour hours. The total budgeted overhead is $3,200,000 of which $900,000 is fixed overhead. The actual results for the year are as follows:
$\begin{array}{ll}\text { Units produced: } & 280,000 \\\text { Direct labour: } & 570,000 \text { hours }@\$ 9 \text { per hour } \\\text { Variable overhead: } & \$ 2,320,000 \\\text { Fixed overhead: } & \$ 872,000\end{array}$
-Refer to the Figure.What is the predetermined variable overhead rate?

• A)$1.50 per direct labour hour
• B)$3.00 per direct labour hour
• C)$3.83 per direct labour hour
• D)$5.50 per direct labour hour

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Definitions:

Common Stock

Equity securities that represent ownership shares in a company, providing voting rights and potential dividends to shareholders.

Days' Sales in Inventory

A financial metric indicating the average number of days a company takes to sell its inventory.

Statement of Financial Position

Another term for a balance sheet, which is a financial document that provides a snapshot of an entity’s assets, liabilities, and shareholders' equity at a specific point in time.

Statement of Comprehensive Income

A financial statement that includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, encompassing both net income and other comprehensive income items.