Question

Luthan Company uses a plantwide predetermined overhead rate of $23.40 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $257,400 of total manufacturing overhead cost for an estimated activity level of 11,000 direct labor-hours. The company incurred actual total manufacturing overhead cost of $249,000 and 10,800 total direct labor-hours during the period. Required: Determine the amount of manufacturing overhead cost that would have been applied to all jobs during the period.

Answer 1

Answer:

$252,720

Explanation:

As for the provided details:

Predetermined overhead rate is based on 11,000 direct labor hours.

The rate identified as $23.40

Since the actual activity is less than the standard labor hours, that is actual labor hours = 10,800

Thus, actual overheads to be applied based on predetermined rate shall be = Rate determined $\times$ actual hours

= $23.40 $\times$ 10,800 = $252,720