Nasara Manufacturing Plc has three direct labour employees that work 40 hours each a week for 50 weeks a year. Factory overhead costs of ₦60,000 is distribu...

Answer Details

To compute the overhead rate, we need to first determine the total number of direct labour hours worked by the three employees in a year. Direct labour hours = number of employees x number of hours worked per week x number of weeks in a year Direct labour hours = 3 x 40 x 50 = 6,000 hours Next, we divide the total factory overhead costs by the total direct labour hours to get the overhead rate per hour. Overhead rate = Factory overhead costs / Direct labour hours Overhead rate = ₦60,000 / 6,000 hours = ₦10 per hour Therefore, the overhead rate for Nasara Manufacturing Plc is ₦10 per hour. Option (C) is the correct answer.