Question

Mesa corp. allocates overhead to production on the basis of direct labor costs. mesa's total estimated overhead is $450,000 and estimated direct labor is $180,000. determine the amount of overhead to be allocated to finished goods inventory if there is $20,000 of total direct labor cost in the jobs in the finished goods inventory. $8,000. $20,000. $70,000. $50,000. $90,000.

Answer 1

Hi there
First find the predetermined overhead rate
Predetermined oH rate is total estimated overhead divided by estimated direct labor

Predetermined oH rate is
450,000÷180,000
=2.5

the amount of overhead to be allocated to finished goods inventory if there is $20,000 of total direct labor cost in the jobs in the finished goods inventory is
2.5×20,000
=50,000. ...answer

Good luck!