Question

Smith Foundry in Columbus, Ohio, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required. At the beginning of the year, the company expected to incur the following: Manufacturing overhead costs$ 630,000 Direct labor cost$1,650,000 Machine hours90,000 At the end of the year, the company had actually incurred the following: Direct labor cost $1,230,000 Depreciation on manufacturing plant and equipment 480,000 Property taxes on plant 19,500 Sales salaries $ 26,500 Delivery drivers' wages 17,000 Plant janitors' wages 8,000Machine hours 56,500 hours How much manufacturing overhead was allocated to jobs during the year?

Answer 1

Answer:

Allocated MOH= $395,500

Explanation:

Giving the following information:

Smith Foundry in Columbus, Ohio, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required.

Manufacturing overhead costs$ 630,000; Machine hours90,000

Actual machine hours:

Machine hours 56,500

First, we need to calculate the predetermined overhead rate:

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

Estimated manufacturing overhead rate= 630,000/90,000= $7 per machine hour

Now, we can allocate overhead based on actual machine hours:

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

Allocated MOH= 7*56,500= $395,500