Kris Company Calculates Its Predetermined Rates Using Practical Volume, Which

question 88

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:

- The predetermined variable overhead rate is

• A) $3.00 per direct labor hour.
• B) $2.50 per direct labor hour.
• C) $5.50 per direct labor hour.
• D) $3.35 per direct labor hour.
• E) None of these are correct.

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Definitions:

Raw Materials

The unprocessed natural materials or substances used in the initial stages of manufacturing to produce goods.

Indirect Materials

Materials used in the production process that cannot be directly linked to a specific product, such as lubricants and cleaning supplies used in the manufacturing facility.

Productions

Refers to the processes and methods involved in transforming raw materials into finished goods or services.

T-Accounts

A visual representation used in bookkeeping to depict the debit and credit sides of an account, helping in the understanding and organization of financial transactions.