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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, $30,000; direct materials, $50,000; and factory overhead applied $6,000. The predetermined overhead rate was: Multiple Choice 5.0%. 12.0%. 20.0%. 500.0%. 16.7%

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Answer:

Estimated manufacturing overhead rate= 20%

Explanation:

To calculate the predetermined overhead rate, we need to use the following formula:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

6,000= Estimated manufacturing overhead rate*30,000

Estimated manufacturing overhead rate= 6,000 /30,000

Estimated manufacturing overhead rate= $0.2 per direct labor dollar

As a percentage= (0.2/1)*100= 20%

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