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    Predetermined overhead rate

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    The work in process inventory for the Smith Corporation has a balance of $4800 at the end of an accounting period. The job-cost sheets of two incomplete jobs show charges of $800 and $400 for materials used and charges of $600 and $1000 for direct labor used. From this information, it appears that Smith Corporation is using a predetermined rate, as a percentage of direct labor costs of:
    A. 240%
    B. 125%
    C. 80%
    D. 41.7%

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    Solution Summary

    The solution explains how to calculate the predetermined overhead rate.