Dean Company Uses a Standard Cost System in Which It

question 15

Multiple Choice

Dean Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of direct labour-hours. The company is preparing a flexible budget for next year and the following data are available: $\begin{array}{ll}&\text { At capacity }\\\text { Direct labour-hours } & 60,000 \\\text { Variable factory overhead } & £ 150,000 \\\text { Fixed factory overhead } & £ 240,000\end{array}$
Assume that Dean's denominator activity for the year is set at 80% of capacity. What would be the total predetermined overhead rate, based on direct labour-hours, for the year

• A)£6.00.
• B)£6.50.
• C)£7.50.
• D)£8.13.

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