Kris Company Calculates Its Predetermined Rates Using Practical Volume, Which

question 7

Multiple Choice

Kris Company calculates its predetermined rates using practical volume, which is 325,000 units.The standard cost system allows 3 direct labor hours per unit produced.Overhead is applied using direct labor hours.The total budgeted overhead is $4,260,000, of which $994,000 is fixed overhead.The actual results for the year are as follows:

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The predetermined fixed overhead rate is

• A) $3.35 per direct labor hour.
• B) $1.02 per direct labor hour.
• C) $5.50 per direct labor hour.
• D) $4.00 per direct labor hour.
• E) None of these.

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Definitions:

Mathematical Mistakes

Errors made in calculations, often due to incorrect addition, subtraction, multiplication, or division, affecting the accuracy of financial statements.

Material

The quality of information that exists when the omission or misstatement of the information could influence the decision that users make.

Size

in a business or economic context typically relates to the scale or dimensions of a company or market, often measured by metrics such as revenues, employee count, or market share.