Answer:
$60.53 per DLH
Explanation:
Calculation for what the predetermined overhead rate under the traditional costing system is closest to:
First step is to calculate the Direct Labor hours each product
Using this formula
Direct Labor hours=Annual production and sales*Direct Labor hour per unit
Direct Labor hours for Product A=1,900 units*0.4 direct labor-hours per unit
Direct Labor hours for Product A=760
Direct Labor hours for Product B=1,300 units*0.7 direct labor-hours per unit
Direct Labor hours for Product A=910
Second step is to calculate the Total Direct Labor hours for Product for Product A and Product B
Product A and B Total Direct Labor hours for Product =760+910
Product A and B Total Direct Labor hours for Product=1,670
Now let calculate the predetermined overhead rate under the traditional costing system using this formula
Predetermined overhead rate =Estimated Overhead/Activity base(Direct Labor Hours)
Let plug in the formula
Predetermined overhead rate=$101,075/1,670
Predetermined overhead rate=$60.53 per DLH
The predetermined overhead rate under the traditional costing system is closest to:$60.53 per DLH
