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The Work in Process Inventory account of a manufacturing company has a $4,400 debit balance. The company applies overhead using direct labor costs. The cost sheet of the only job still in the process shows the direct material cost of $2,000 and a direct labor cost of $800. Therefore, the company's predetermined overhead rate is:

Respuesta :

Answer:

$2 per direct labor cost

Explanation:

For computing the predetermined overhead rate, first we have to compute the manufacturing overhead which is shown below:

Manufacturing overhead = Work in Process Inventory amount - direct material cost - direct labor cost

= $4,400 - $2,000 - $800

= $1,600

Now the predetermined overhead rate would be

= Manufacturing overhead ÷  direct labor cost

= $1,600 ÷ $800

= $2 per direct labor cost

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