Answer:
The 140% is the predetermined factory overhead rate based on direct labor cost.
Explanation:
The given information is shown below:
Total factory overhead cost - $140,000
Total direct labor costs - $100,000
Actual direct labor cost - $13,500
Factory overhead cost - $19,200
By using these information, it is easy to compute predetermined factory overhead rate which is based on direct labor cost. The formula is shown below:
= Total factory overhead cost ÷ Total factory overhead cost
= ($140,000 ÷ $100,000) × 100
= 1.4 × 100
= 140%
Other cost is irrelevant and thus not be considered while computing predetermined factory overhead rate.
Hence, the 140% is the predetermined factory overhead rate based on direct labor cost.
