Austin Company uses a job order cost accounting system The c

Austin Company uses a job order cost accounting system. The company\'s executives estimated that direct labor would be $4,590,000 (270,000 hours at $17/hour) and that factory overhead would be $1,570,000 for the current period. At the end of the period, the records show that there had been 250,000 hours of direct labor and $1,270,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead allocation rate? (Round your answer to two decimal places.) $5.81 per direct labor hour. $4.70 per direct labor hour. $6.28 per direct labor hour. $5.37 per direct labor hour. $5.78 per direct labor hour.

Solution

Budgeted Overhead 1570000 Estimated Direct Labour Hours 270000 Predetermined Overhead Allocated Rate =1570000/270000 5.814814815