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Budgeted factory overhead for the year is $546,000 and budgeted direct labour hours are 3,000. What is the single factory wide overhead rate?
A$155 per direct labour hour
B$182 per direct labour hour
C$236 per direct labour hour
D$210 per direct labour hour
Answer & Solution
Correct answer: B. $182 per direct labour hour
1. A single factory wide rate divides total budgeted factory overhead by the total budgeted activity base.
2. Total budgeted factory overhead is $546,000 and the activity base is 3,000 direct labour hours.
3. $546,000 divided by 3,000 hours gives $182 per direct labour hour.
4. $155 and $236 are departmental rates built from departmental totals, not from the factory wide total.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 4.2 Single Factory Rate to Estimate Factory Overhead_
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