Answer (A) is correct . The predetermined overhead application rate is found by dividing the total budgeted overhead by the budgeted direct labor cost. Hence, the predetermined overhead application rate is 1.78 [$961,200 ¡Â ($15 ¡Á 36,000 hours)].Answer (B) is incorrect because The figure of 1.83 results from dividing total budgeted overhead by the actual direct labor cost.
Answer (C) is incorrect because The figure of 2.09 results from dividing total actual overhead by the budgeted direct labor cost.
Answer (D) is incorrect because The figure of 2.15 results from dividing total actual overhead by the actual direct labor cost.
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What is Northcoast’s predetermined overhead application rate for the year?
