Crestwood Industries uses a job order cost accounting system. The company's management estimated that direct labor would be $4,500,000 (375,000 hours at $12/hour) and that factory overhead would be $2,700,000 for the upcoming fiscal year. At the end of the year, the records show that there had been 350,000 hours of direct labor and $2,600,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead allocation rate?

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter3: Process Cost Systems
Section: Chapter Questions
Problem 4E: The cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the...
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What was the predetermined overhead allocation rate of this general accounting question?

Crestwood Industries uses a job order cost accounting
system. The company's management estimated that direct
labor would be $4,500,000 (375,000 hours at $12/hour) and
that factory overhead would be $2,700,000 for the
upcoming fiscal year. At the end of the year, the records
show that there had been 350,000 hours of direct labor and
$2,600,000 of actual overhead costs. Using direct labor
hours as a base, what was the predetermined overhead
allocation rate?
Transcribed Image Text:Crestwood Industries uses a job order cost accounting system. The company's management estimated that direct labor would be $4,500,000 (375,000 hours at $12/hour) and that factory overhead would be $2,700,000 for the upcoming fiscal year. At the end of the year, the records show that there had been 350,000 hours of direct labor and $2,600,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead allocation rate?
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