O.K. Company uses a job order cost accounting system an - 10503

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  • Posted on: Mon 28 May, 2012
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Request Description

 

O.K. Company uses a job order cost accounting system and allocates its overhead on the basis of direct labor costs. O.K. expects to incur $800,000 of overhead during the next period, and expects to use 50,000 labor hours at a cost of $10.00 per hour. What is O.K. Company's overhead application rate?

 

Answer

 

 

6.25%.

 

62.5%.

 

160%.

 

1600%.

 

67%.

 

Solution Description

 

O.K. Company uses a job order cost accounting system and allocates its overhead on the basis of direct labor costs. O.K. expects to incur $800,000 of overhead during the next period, and expects to use 50,000 labor hours at a cost of $10.00 per hour. What is O.K. Company's overhead application rate?

 

Answer