Wall Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company”s estimated costs for the next year are:
|
Direct materials |
$3,000 |
|
Direct labor |
$20,000 |
|
Depreciation on factory equipment |
$6,000 |
|
Rent on factory |
$12,000 |
|
Sales salaries |
$29,000 |
|
Factory utilities |
$15,000 |
|
Indirect labor |
$6,000 |
It is estimated that 10,000 direct labor hours will be worked during the year. The predetermined overhead rate will be:
A) $3.90
B) $5.90
C) $6.80
D) $9.10