If an actual manufacturing overhead costs is $225000 and actual total quantity of cost allocation base is 2500 labor hours, then the overhead rate will be __________?
Correct answer: B. $90
- A. $60
- B. $90
- C. $80
- D. $70
Explanation
The overhead rate is calculated as actual overhead divided by the allocation base: $225,000 ÷ 2,500 labor hours = $90 per labor hour. Therefore, option b is correct.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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