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MC Qu. 113 Kayak Company uses a job order costing... Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $35,000; direct materials, $55,000; and factory overhead applied $6,500. The overhead application rate was:

User Akonsu
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Answer:

$0.19 per direct labor hour

Step-by-step explanation:

It is important to keep in mind the following :

Overhead application rate = Budgeted Overheads ÷ Budgeted Activity

also,

Applied Overheads = Overhead application rate x Actual Activity

Using the formula :

Applied Overheads = Overhead application rate x Actual Activity

hence,

Overhead application rate = Applied Overheads ÷ Actual Activity

therefore,

Overhead application rate = $6,500 ÷ $35,000

= $0.185 or $0.19 per direct labor hour

User Mhenning
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