Question

At the beginning of the year, Blevins Company estimated manufacturing overhead cost of $416,000 and direct labor cost of $520,000. The firm allocates manufacturing overhead on the basis of direct labor cost. For the month of August, direct labor cost was $36,900. Calculate manufacturing overhead allocated to production for the month of August.

Answer 1

Answer:

Allocated MOH= $29,520

Explanation:

Giving the following information:

Estimated manufacturing overhead cost= $416,000

Direct labor cost= $520,000.

The firm allocates manufacturing overhead based on direct labor cost. For August, direct labor cost was $36,900.

First, we need to calculate the estimated overhead rate:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 416,000/520,000= $0.8 per direct labor dollar.

Now, we can allocate overhead:

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

Allocated MOH=  0.8*36,900= $29,520