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Crane Company provided the following information from its accounting records for 2019.

Expected production 90000 labor hours
Actual production 76000 labor hours
Budgeted overhead $900000
Actual overhead $860000

How much is the overhead application rate if Crane Company bases the rate on direct labor hours?




$11.32 per hour


$9.56 per hour


$10.00 per hour


$11.84 per hour

Respuesta :

Answer:

$10.00 per hour

Step-by-step explanation:

Overhead application rate which is also known as overhead absorption rate on the basis on labor hours is the total budgeted overhead  for 2019 which is $900,000 divided by the expected production of 90,000 labor hours for the year.

overhead application rate=$900,000/90,000=$10 per hour

This implies that for every one hour worked overhead cost of $10 would be added to the other costs incurred.

The correct option then is the third option of $10.00 per hour

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