Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $27,000; direct materials, $47,000; and factory overhead applied $5,700. The overhead application rate was:

Question

Charles Kerr

Business

9 January, 12:31

Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $27,000; direct materials, $47,000; and factory overhead applied $5,700. The overhead application rate was:

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Answers (1)

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Olivia Wilson · Answer 1

21.11%

Explanation:

The computation of the overhead application rate is shown below:

As we know that

Overhead application rate = Factory overhead applied : direct labor cost

= $5,700 : $27,000

= 21.11%

By dividing the factory overhead applied by the direct labor cost we can get the factory overhead rate and the same is to be shown in the computation part