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hichkok12 [17]
3 years ago
7

Predetermined overhead rate LO P3 At the beginning of a year, a company predicts total direct materials costs of $920,000 and to

tal overhead costs of $1,330,000. If the company uses direct materials costs as its activity base to allocate overhead, what is the predetermined overhead rate it should use during the year?
Business
1 answer:
timofeeve [1]3 years ago
6 0

Answer:

145%

Explanation:

Given that,

Company predicts total direct materials costs = $920,000

Total overhead costs = $1,330,000

Predetermined Overhead rate:

= (Total overhead cost ÷ Total direct material cost) × 100

= ($1,330,000 ÷ $920,000) × 100

= 1.45 × 100

= 145%

Therefore, the predetermined overhead rate it should use during the year is 145%.

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