Question

The Work in Process Inventory account of a manufacturing company has a $7,728 debit balance. The company applies overhead using direct labor cost. The cost sheet of the only job still in process shows direct material cost of $2,800 and direct labor cost of $1,600. Therefore, the company's predetermined overhead rate is:

Answer 1

208%

Step-by-step explanation:

Work In Progress= Direct materials + Direct labor+ Over Head

$7,728 = $2,800 + $1,600 + OH

$7,728=$4,400

$7,728-$4,400

OH=$3,328

OH rate = $3,328/$1,600

= 208%

Answer 2

The company's predetermined overhead rate is 208%

Step-by-step explanation:

In order to calculate the company's predetermined overhead rate we would have to calculate first the Overhead applied as follows:

o verhead applied=Work in process balance-Direct Material-Direct Labor

o verhead applied=$7,728-$2,800-$1,600

o verhead applied=$3,328

Therefore, Overhead application rate = $3,328/$1,600= 217%

Overhead application rate =208%

The company's predetermined overhead rate is 208%