Question

A company 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 the following estimated amounts: total fixed manufacturing overhead cost of $90,000 variable manufacturing overhead of $3.70 per direct labor-hour direct labor-hours of 50,000 The company recently completed Job M800 which required 150 direct labor-hours. The amount of overhead applied to Job M800 is closest to:

Answer 1

Answer:

Allocated MOH= $825

Explanation:

Giving the following information:

The company recently completed Job M800 which required 150 direct labor-hours.

First, we need to calculate the predetermined overhead rate:

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

Predetermined manufacturing overhead rate= (90,000/50,000) + 3.7

Predetermined manufacturing overhead rate= $5.5 per direct labor hour

Now, we can allocate overhead:

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

Allocated MOH= 5.5*150

Allocated MOH= $825