Question

Reynolds Manufacturers Inc. has estimated total factory overhead costs of $116,000 and expected direct labor hours of 11,600 for the current fiscal year. If job number 117 incurs 1,700 direct labor hours, Work in Process will be debited and Factory Overhead will be credited for

Answer 1

Answer:

Overhead= $17,000

Explanation:

Giving the following information:

estimated total factory overhead costs of $116,000

expected direct labor hours of 11,600

Job number 117 incurs 1,700 direct labor hours

First, we need to calculate the predetermined manufacturing overhead rate:

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

Predetermined manufacturing overhead rate= 116,000/11,600

Predetermined manufacturing overhead rate= $10 per direct labor hour

Now, we can determine the amount of allocated overhead:

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

Allocated MOH= 10*1,700= 17,000