Question

Meenach Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on 74,000 direct labor-hours, total fixed manufacturing overhead cost of $74,000, and a variable manufacturing overhead rate of $3.10 per direct labor-hour. Recently Job X387 was completed and required 210 direct labor-hours.
Required:

Calculate the amount of overhead applied to Job X387. (Do not round intermediate calculations.)

Answer 1

Answer:

$861

Explanation:

Fixed predetermined overhead rate = Total fixed overhead cost/Total labor hours

= $ 74,000/74,000 = $ 1 PLH

Variable predetermined overhead rate = $ 3.10 PLH

Applied overhead rate = Fixed predetermined overhead rate + Variable predetermined overhead rate = $ 1 + $ 3.10 = $ 4.1 PLH

Applied overhead cost for Job X387 = Applied overhead rate x No. of labor hours required for job X387 = $ 4.1 x 210 = $ 861

Answer 2

Answer:

$ 861

Explanation:

We are given the  total fixed overhead from which we can determine the fixed overhead rate and then sum it up with variable overhead rate. The total overhead rate is multiplied with the number of direct labor hours to get the applied overhead.

Meenach Corporation

Total fixed manufacturing overhead cost  $74,000,

Predetermined  fixed overhead rate= Fixed manufacturing overhead cost  / No of direct labor Hours

Predetermined  fixed overhead rate=$74,000/74,000=$ 1

Variable manufacturing overhead rate of $3.10 per direct labor-hour

Total Overhead Rate= 1+3.10= $ 4.10

Job X387 required 210 direct labor-hours

Total applied Overhead to Job X387= $ 4.10 * 210= $ 861