Question

1) Job 200 Job 201 Job 202 Direct Materials S 500 350 1,000 Direct Direct Labour Cost Labour Hours $800 200 10 600 30 Franks Fabricating uses job costing and applies overhead using a normal costing system and uses direct labour cost as the allocation base. This period's estimated overhead cost is $100,000 and estimated direct labour cost of $50,000 and 2,500 direct labour hours. What is the overhead allocation rate? *a) 200% b) 50% c) 30% d) 60%

Answer 1

Роаемою Anghe Given that, Estimated overhead cost $100,000 Estimated Direct labor cost = $50,000 Direct labor hours = 2,500 hrs This is given that overhead allocation is based on direct labor cost overhead allocation rate : 100,000 50,000 Overhead cost Discect labor cest = 2 per cost Overhead allocation on the basis of direct laborhours overhead cost = $100,000 Diouet labor hours. $2500 = $40 per direct labod Overhead allocation rate = 2 x$40

Pagenda Percentage of overhead allocation vote = $80x100 $40 - 2 x 100 = 200% The Overhead allocation rate = 2004, option a is correct.