Question

Lueckenhoff 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 total fixed manufacturing overhead cost of $497,000, variable manufacturing overhead of $2.40 per direct labor-hour, and 70,000 direct labor-hours. The company has provided the following data concerning Job T498 which was recently completed: Number of units in the job 40 Total direct labor-hours 80 Direct materials $ 950 Direct labor cost $ 2,720 The amount of overhead applied to Job T498 is closest to: (Round your intermediate calculations to 2 decimal places.) Garrison 16e Rechecks 2017-06-28 Multiple Choice $760 $952 $192 $568

Answer 1

Fixed cost = $497,000

Variable manufacturing overhead cost per direct labor hour = $2.40

Direct labor hours = 7,000

Predetermined overhead rate = Variable manufacturing overhead cost per direct labor hour + Fixed cost/Direct labor hours

= 2.40 + 497,000/7,000

= 2.40 + 7.1

= $9.50 per direct labor hour

Direct labor hours used in Job 498 = 80

Overhead applied to Job 498 = Direct labor hours used in Job 498 x Predetermined overhead rate

= 80 x 9.50

= $760

First option is correct option.

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