If an actual manufacturing overhead costs is $485000 and actual total quantity of cost allocation base is 4500 labor hours, then the overhead rate would be _____________?
Correct answer: B. $107.78
- A. 109.87
- B. $107.78
- C. $106.56
- D. $104.34
Explanation
The overhead rate is calculated as actual manufacturing overhead divided by actual allocation-base usage: $485,000 ÷ 4,500 hours = $107.78 per labor hour. This matches option b.
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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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