Question

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:

Answer 1

Answer:

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