Question

Orange Corporation manufactures custom-made wallets. The following data pertains to Job GH7: Direct materials placed into production $5,000 Direct labor hours worked 75 hours Direct labor rate per hour $35 Machine hours worked 200 hours Factory overhead is applied using a plant-wide rate based on direct labor hours. Factory overhead was budgeted at $100,000 for the year, and the direct labor hours were estimated to be 25,000. Job GH7 consists of 60 units. What is overhead cost assigned to Job GH7

Answer 1

Answer: Overhead cost assigned to Job GH7 is $300.

Explanation:

Given that,

Direct materials placed into production = $5000

Direct labor hours worked = 75 hours

Direct labor rate per hour = $35

Machine hours worked  = 200 hours

Factory overhead was budgeted = 100000

direct labor hours were estimated = 25000

Job GH7 consists = 60 units

Predetermined rate = $\frac{Factory\ Overhead\ Budgeted}{Direct\ Labor\ hours\ estimated}$

= $\frac{100000}{25000}$

=$4

Hence,

overhead cost assigned to Job GH7 = Direct labor hours worked × Predetermined rate

= 75 ×  4

=$300