Question

Question 13 1 pts Gerstein Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $90,000, variable manufacturing overhead of $3.70 per direct labor-hour, and 50,000 direct labor-hours. The company recently completed Job M800 which required 150 direct labor-hours. The predetermined overhead rate is closest to: O $1.80 per direct labor-hour $5.50 per direct labor-hour O $3.70 per direct labor-hour O $9.20 per direct labor-hour

Answer 1

Correct answer-----------$5.50 per direct labor-hour

Working

(A)	Budgeted Fixed Factory Overheads	$ 90,000
(B)	Budgeted Direct labor hours	50,000
C= (A/B)	Overhead rate for Fixed overhead	$                      1.80
D	Variable overhead rate	$ 3.70
E= C+D	Plantwide predetermined overhead rate	$ 5.50 per Hour

Plantwide overhead rate is used to allocate overhead cost to jobs.