Fancy Decorating uses a job order costing system to collect the costs of its int
ID: 2492732 • Letter: F
Question
Fancy Decorating uses a job order costing system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year.
Budgeted overhead $940,000
Actual overhead $970,000
Budgeted decorator hours 60,000
Actual decorator hours 59,000
What is the predetermined overhead rate you will use in applying overhead into work in process?
$ 15.67 per decorator hour.
$31.75 per decorator hour.
$ 22.80 per decorator hour.
$33.49 per decorator hour.
a.$ 15.67 per decorator hour.
b.$31.75 per decorator hour.
c.$ 22.80 per decorator hour.
d.$33.49 per decorator hour.
Explanation / Answer
the predetermined overhead rate= Budgeted overhead/Budgeted decorator hours =$940,000/ 60,000=$ 15.67 per decorator hour.
so a.$ 15.67 per decorator hour.
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