Question

Meenach Corporation 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 79,000 direct labor-hours, total fixed manufacturing overhead cost of $158,000, and a variable manufacturing overhead rate of $4.10 per direct labor-hour. Recently Job X387 was completed and required 300 direct labor-hours. Required: Calculate the amount of overhead applied to Job X387. (Do not round Intermediate calculations.) Overhead applied to Job X387

Answer 1

Overhead applied to job X387

1,830

Calculations and explanations:

Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base)

= $158,000 + ($4.10*79,000)

= 158,000 + 323,900

= $481,900

Thus predetermined overhead rate = estimated total manufacturing overhead cost/estimated total amount of the allocation base

= $481,900/79,000 hours

= $6.10 per hour

Overhead applied to X387 = predetermined overhead rate * 300 direct labor hours used by X387

= $6.10 per hour * 300 hours

= $1,830