Coleridge Company estimates that its production workers will work 124,000 direct labor hours during the upcoming period and that overhead costs will amount to $868,000. Assume overhead to be allocated on the basis of direct labor hours. What predetermined overhead rate would be used to apply overhead to production during the period?

Coleridge Company estimates that its production workers will work 124,000 direct labor hours during the upcoming period and that overhead costs will amount to $868,000. Assume overhead to be allocated on the basis of direct labor hours. What predetermined overhead rate would be used to apply overhead to production during the period?

Name: Coleridge Company estimates that its production workers will work 124
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Description: Coleridge Company estimates that its production workers will work 124,000 direct labor hours during the upcoming periodand that overhead costs will amount to $868,000. Assume overhead to be allocated on the basis of direct labor hours. Whatpredeterm

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

Coleridge Company estimates that its production workers will work 124,000 direct labor hours during the upcoming period
and that overhead costs will amount to $868,000. Assume overhead to be allocated on the basis of direct labor hours. What
predetermined overhead rate would be used to apply overhead to production during the period?
Multiple Choice
$0.77 per direct labor hour
$7.00 per direct labor hour
$0.77 per unit
$7.00 per unit

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