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 75.000 direct labor hours, total fixed manufacturing overhead cost of $150,000, and a variable manufacturing overhead rate of $2.70 per direct labor-hour. Recently Job X387 was completed and required 150 direct labor-hours. Required: Calculate the amount of overhead applied to Job X387. (Do not round intermediate calculations.) Overtad applied to Job Xay

Answer 1

Fixed Overhead Predetermined overhead rate = Total Fixed overhead/number of hours
=$150000/75000 hours
=$2 per hour
Total predetermined overhead = fixed overhead predetermined overhead + variable overhead predetermined overhead rate
=$2+2.70
=$4.70 per labor hour
Overhead cost applied to Job X38
= 150 labor hours *$4.70 per hour
=$705